Tax Notes Quotes Clark Armitage on Facebook’s New Tax Bill

According to Meta’s latest quarterly SEC report, the IRS issued a $15.89 billion deficiency notice that could be based on periodic adjustments regarding Facebook’s 2010 platform technology transfer in a cost-sharing arrangement with Irish affiliates.

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Clark Armitage of Caplin & Drysdale’s Washington office sees some merit to this assumption. “It appears as if this notice of deficiency were based on a periodic adjustment, including a catch-up adjustment in the ‘adjustment year,’ even though without seeing the actual document, no observer can say for sure,” he told Tax Notes on November 24.

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Armitage sees this approach as critical, especially with regard to Facebook. “The IRS’s use of periodic adjustments does seem fundamentally inconsistent with its theory of the case for the 2010 tax year, which relied on a lump sum valuation approach,” he said. “One has to wonder how a later Tax Court will react to what seems like a cavalier use of court resources, particularly since the IRS could have presented periodic adjustments as an alternative theory for 2010 and later adjustments seem to ignore the Tax Court’s valuation determination.”

To read the article in full, please visit Tax Notes’ website.