On July 24, 2018, the United States Court of Appeals for the 9th Circuit overturned the United States Tax Court’s landmark Altera Corporation vs. Commissioner of Internal Revenue’s 2015 decision. The crux of the case centered around the requirement for cost-sharing agreements between controlled parties to include stock-based compensation.
The case was heard by Chief Judge Sidney R. Thomas, and Circuit Judges Stephen Reinhardt and Kathleen M. O’Malley with the opinion provided by Chief Judge Thomas and the dissent by Judge O’Malley.
Ultimately, the majority reversed the 2015 decision on the grounds that the Commission had not exceeded the authority granted to him by Congress and his rule-making did, in fact, comply with the APA regulation which is entitled to Chevron deference.
With potential fallout to come, what could potentially be the ramifications of this historic reversal?
Update: On August 7, 2018, the decision was reversed for further review.