Ninth Circuit withdraws Altera opinion

The Ninth Circuit on Tuesday announced that it is withdrawing its July 24 opinion in the Altera Corp. case (Altera Corp., No. 16-70496 (9th Cir. 8/7/18) (opinion withdrawn)). The order announcing the withdrawal says it is being done “to allow time for the reconstituted panel to confer on this appeal.”

The panel of judges has been reconstituted because one of the original judges in the case, Stephen Reinhardt, died before the opinion was issued (although the opinion says he “fully participated in this case and formally concurred in the majority opinion prior to his death” (Altera Corp., slip op. at 1, fn.)).

Reinhardt has been replaced on the three-judge panel by Judge Susan Graber.

The Ninth Circuit’s July 24 decision had reversed a Tax Court decision holding 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 scrutiny under general administrative law principles and is therefore valid. (For prior coverage, see “Stock-Based Compensation Cost-Sharing Regs. Valid.”)

— Alistair M. Nevius (Alistair.Nevius@aicpa-cima.com) is The Tax Adviser’s editor-in-chief.