Coca-Cola Ruling Sends Warning on Facebook, Medtronic Tax Fights

A U.S. Tax Court ruling that Coca-Cola Co. must pay most of a $3.4 billion additional tab ordered by the IRS for attributing too much profit to foreign affiliates may have reverberations for Facebook Inc., Medtronic Inc. and other multinational companies facing potentially multi-billion-dollar assessments in similar cases.

The Tax Court’s decision Wednesday upheld the IRS’s method for reallocating profits between Coca-Cola and affiliates that made and sold ingredients for the company’s soft drinks. The ruling pertained to the beverage giant’s taxable income between 2007 and 2009.

Some differences between Coca-Cola’s business model and that of other multinationals in ...