3M’s Transfer Pricing Win Marks Tax Code Interpretation Upheaval

3M Co.‘s recent transfer pricing victory before the Eighth Circuit will require reinterpretation of a key tax code provision, potentially upending major pending cases involving some of the world’s largest multinational companies.

The US Court of Appeals for the Eighth Circuit reversed and remanded a US Tax Court decision against the company after determining that IRC Section 482 didn’t grant the IRS the power to tax income from a Brazilian subsidiary that 3M couldn’t legally receive under Brazilian law.

The ruling allowed 3M to escape a $4.85 million tax liability on $23.65 million in royalty income tied to the ...