In perhaps the most widely-watched tax case by corporate America in over 15 years, Fenwick & West LLP announced today that the U.S. Tax Court issued a fully favorable opinion yesterday in Xilinx v. Commissioner of Internal Revenue, finding that Xilinx's allocations met the arm's length standard. The Xilinx case dealt with cost sharing, a common practice for developing new intangibles and products for multinational companies. The Court extensively discussed the law and the evidence to support its conclusion.
"Many clients deal with significant tax issues arising from the use of intangibles in their businesses," said Ron Schrotenboer, Partner in the Fenwick & West Tax Practice. "This confirms the views of taxpayers with respect to stock options and cost sharing transactions."
The decision resolved the last issue in the case where the IRS had originally asserted over $120 million in additional taxes and penalties. The resolution of the case will result in Xilinx owing less than 5% of the amount originally asserted. "We are pleased with the decision in our case," said Joe Forgy, Vice President of Taxes at Xilinx "It confirms the importance of the arm's length standard and evidence to support that standard. This case will likely have significance for the revisions made to the cost sharing regulations issued in 2003. We thank all those in the high tech industry that supported our position in this case."
Fenwick & West Tax Practice partners Kenneth Clark and Ron Schrotenboer and former partner Bill Colgin spent over three years working on the case, which was tried in July 2004. Fuller said, "As the trial approached, our litigation partner Tyler Baker was added to the team and quickly became invaluable."
About Fenwick & West
Established in 1972, Fenwick & West LLP provides comprehensive legal services to high technology and life sciences clients of national and international prominence. The Fenwick & West Tax Group is continually recognized as one of the top tax practices in the United States, particularly in the areas of tax planning, transfer pricing and cross-border transactions. International Tax Review recently ranked Fenwick & West as one of only 4 "first-tier" U.S. law firms in tax. For more information: James J. Stapleton Chief Marketing Officer Phone: 650.335.7641