Medtronic IP Deal Assigned Transfer Pricing Standard on Appeal

Medtronic Inc.‘s intellectual property deal with its Puerto Rican subsidiary is best priced using the IRS’s proposed method for determining arm’s-length consideration, the Eighth Circuit said Wednesday.

The US Court of Appeals for the Eighth Circuit remanded the case back to the US Tax Court, rejecting how the court applied its own specified method to calculate Medtronic’s intellectual property transfers with a Puerto Rican subsidiary. Chief Judge Steve M. Colloton said the Tax Court “applied an incorrect standard” when it rejected the IRS’s favored comparable profits method, which requires the IRS to examine if the transaction’s price and terms ...