As Amazon Trial Closes, Tax Court Judge Alludes to One Conclusion About Cost Pool

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Dec. 23 — As Amazon's five-week transfer pricing trial came to a close Dec. 23, presiding Judge Albert G. Lauber offered a glimpse into one aspect of how he will rule in the dispute over the valuation of intangibles under a cost sharing arrangement between the U.S. Internet giant and its Luxembourg affiliate. [ Inc. v. Comr., T.C., No. 31197-12, trial concluded 12/23/14]
The trial has featured a dazzling array of intellectual firepower as experts armed with Ivy League doctorates have variously argued for or against the Internal Revenue Service's contention that Amazon grossly underpriced the transfer of intangibles to Amazon Europe Holding Technologies (AEHT) in a 2004 restructuring. Amazon valued the transferred intangibles at $216 million; the IRS claims they actually were worth $3.6 billion. The IRS also contends that Amazon undercharged AEHT for its share of the cost pool, increasing the payments by more than $130 million for tax years 2005 and 2006.