By Sally P. Schreiber, J.D., July 25, 2018

A transfer-pricing regulation that requires related entities to share the cost of employee stock compensation is a valid regulation, the Ninth Circuit held on Tuesday (Altera Corp., No. 16-70496 (9th Cir. 7/24/18)). The appeals court reversed a Tax Court decision that had held Regs. Sec. 1.482-7A(d)(2) to be invalid under the Administrative Procedure Act (APA) (Altera, 145 T.C. 91 (2015)). The Ninth Circuit found that the regulation, which requires related entities to share the cost of employee stock compensation for their cost-sharing arrangements to be considered qualified cost-sharing arrangements (QCSAs) and avoid IRS adjustment, withstands general administrative law principals and is therefore valid. Read more.