Opinion
15631-22 16017-21
03-05-2024
AMGEN INC. & SUBSIDIARIES, ET. AL., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Travis A. Greaves, Judge.
Currently before the Court is respondent's Motion for Order to Show Cause Why Proposed Facts and Evidence Should Not be Accepted as Established Pursuant to Rule 91(f), filed January 4, 2024. Therein, respondent requests that we issue an order directing petitioner to show cause why the matters set forth in respondent's proposed Segmented Financial Stipulation and its attached exhibits should not be deemed admitted for purposes of these cases. For the reasons set forth below, we deny respondent's motion.
Unless otherwise indicated, Rule references are to the Tax Court Rules of Practice and Procedure, and statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times.
Respondent did not attach to his motion an exhibit titled Segmented Financial Stipulation. Rather, he attached two documents titled Joint Third Stipulation of Facts Second Financial Stipulations. We will assume for purposes of this motion that respondent intends to compel stipulation of the Joint Third Stipulation of Facts Second Financial Stipulations.
Background
The following facts are derived from the pleadings, the parties' motion papers, and the exhibits and declarations attached thereto. They are stated solely for purposes of deciding the motions and not as findings of fact in these cases. See Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994).
The transactions at issue primarily involve Amgen Inc. (Amgen), Amgen Manufacturing Limited (AML), Immunex Corporation and Amgen USA, Inc. AML is a Puerto Rican subsidiary of Amgen. The primary issue in these cases is the Commissioner's allocation of income under section 482 between Amgen and AML. The parties have engaged in discovery for over one year.
On May 26, 2023, respondent filed a Motion to Compel Responses to Interrogatories, related to respondent's Second Request for Answers to Interrogatories. Requests 1 and 2 asked that petitioner provide the segmented income statements and balance sheets of various Amgen entities segmented by product for years 2002 through 2015. On June 30, 2023, petitioner filed an Opposition to Motion to Compel Responses to Interrogatories, representing that it does not maintain segmented financial statements. However, on the same day, petitioner produced to respondent newly created segmented income statements related to tax years 2010-2015. On September 6, 2023, the parties filed a joint status report that requested the Court to hold respondent's motion with respect to the segmented income statement request for years 2010-2015 in abeyance.
On September 19, 2023, we issued an Order that required the parties to file a joint status report with respect to the segmented income statement request for years 2010-2015. Additionally, the Order required petitioner to produce all relevant documents related to respondent's interrogatories and ordered petitioner, to the extent respondent assembled any segmented financial statements, to stipulate to the accuracy of the documents or propose reasonable adjustments to the documents. The parties filed additional status reports on October 31, 2023, and November 30, 2023, related to the segmented financial statements.
On September 28, 2023, respondent provided a draft 2010-2015 AML segmented balance sheet to petitioner. On October 25, 2023, respondent provided a draft 2009 AML segmented income statement to petitioner. Petitioner proposed adjustments to these draft segmented financial statements on October 26, 2023, and November 22, 2023. On November 28, 2023, respondent proposed stipulating to the accuracy of the segmented financial statements in a Joint Third Stipulation of Facts Second Financial Stipulations. Respondent revised this stipulation on December 6, 2023. On December 20, 2023, petitioner raised concerns regarding the proposed segmented financial statements that it alleges were not addressed by respondent.
On January 4, 2024, respondent filed a Motion for Order to Show Cause Why Proposed Facts and Evidence Should Not be Accepted as Established Pursuant to Rule 91(f). Respondent attached to his motion petitioner's proposed adjustments and the two stipulations he sent to petitioner. Respondent did not attach to his motion the exhibits referenced in either stipulation. On February 16, 2024, petitioner filed an objection to respondent's motion.
Discussion
Rule 91(a)(1) requires the parties to stipulate, to the fullest extent practicable, to all facts, all documents, and all evidence "that fairly should not be in dispute." A party is not required to stipulate to legitimately disputed facts. Rule 91(a)(1); Stamos v. Commissioner, 87 T.C. 1451, 1456 (1986). Rule 91(f)(1) provides that if a party has refused or failed to stipulate to any matter within the terms of Rule 91, the party proposing to stipulate may file a motion with the Court for an order directing the delinquent party to show cause why the matters covered in the motion should not be deemed admitted for the purposes of the case. Rule 91(f)(1) states that the motion must:
(A) identify with particularity and by separately numbered paragraphs each matter that is claimed for stipulation;
(B) set forth in express language the specific stipulation that the moving party proposes with respect to each matter and annex thereto or make available to the Court and the other parties each document or other paper as to which the moving party desires a stipulation;
(C) set forth the sources, reasons, and basis for claiming, with respect to each such matter, that it should be stipulated; and
(D) show that opposing counsel or the other parties have had reasonable access to those sources or basis for stipulation and have been informed of the reasons for stipulation.
In response to a motion under Rule 91(f), the Court may then issue an order to show cause, and the party to whom the order is directed must file a response showing why the proposed facts and documents should not be deemed admitted. Rule 91(f)(2).
Respondent's motion is deficient in several respects. First, respondent failed to attach to his motion the segmented financial statements referenced in his draft Joint Third Stipulation of Facts Second Financial Stipulations as required by Rule 91(f)(1)(B). Without these exhibits, we will not require petitioner to stipulate to their accuracy. Respondent's motion further fails to set forth sources, reasons, and basis for claiming that the financial statements should be stipulated as required by Rule 91(f)(1)(C). Respondent did not explain the documents he consulted nor his process in constructing the segmented financial statements. Finally, respondent's motion did not show that petitioner had reasonable access to this information in accordance with Rule 91(f)(1)(D).
In addition to these procedural defects, the segmented financial statements appear legitimately in dispute. Petitioner raises several alleged errors with the segmented financial statements that respondent has not addressed. These alleged errors create a genuine dispute as to whether the segmented financial statements accurately reflect petitioner's business. Therefore, we will not require petitioner to stipulate to the accuracy of the segmented financial statements. We deny respondent's Motion for Order to Show Cause Why Proposed Facts and Evidence Should Not be Accepted as Established Pursuant to Rule 91(f), filed January 4, 2024.
Upon due consideration, it is
ORDERED that respondent's Motion for Order to Show Cause Why Proposed Facts and Evidence Should Not be Accepted as Established Pursuant to Rule 91(f), filed January 4, 2024, is denied.