J. Clark Armitage spoke with Bloomberg BNA concerning the billion-dollar tax dispute between the IRS and Coca-Cola. Coca-Cola is challenging the reallocation of $9.4 billion in income from seven foreign affiliates to the U.S. parent which the IRS has hung a tax deficiency of $3.3 billion. For the complete article, please visit Bloomberg BNA's website (subscription required).
Excerpt taken from the article.
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Coke "is a unique twist for a couple of reasons—there are some branch issues involved instead of just typical inter-entity issues," said Caplin & Drysdale's Armitage.
However, he added, "I don't think that's the reason they designated it for litigation." Rather, "it's really the substance of the transaction. The IRS views a lot of transactions as being mischaracterized in terms of who owns what and what is valuable."
In Coca-Cola, he said, the IRS is "definitely challenging whose value it is."
Reproduced with permission from Tax Management Transfer Pricing Report, Vol. 24, No. 21 (Mar. 17, 2016). Copyright 2016 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>