Opinion
3755-17 3756-17
10-13-2022
Bloomberg L.P, Bloomberg, Inc., Tax Matters Partner, ET AL., Petitioner(s) v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Joseph Robert Goeke Judge
On June 16, 2022, respondent filed a Motion in Limine to exclude an advance pricing agreement (APA), which encompasses the years at issue, between Bloomberg, Inc. (petitioner), Bloomberg L.P. (Bloomberg), Bloomberg Finance L.P. (BFLP), Bloomberg Tradebook LLC, and the Internal Revenue Service regarding the attribution of gross income between Bloomberg and BFLP and those entities' UK branches. He asserts that the APA is not admissible pursuant to Rev. Proc. 2006-9, specifically sections 10.03 and 10.04, as modified by Rev. Proc. 2008-31.
Petitioner objects to the Motion and filed an Opposition on July 14, 2022. On August 15, 2022, respondent filed a Reply to petitioner's Opposition and on September 13, 2022, petitioner filed a Sur-Reply. Petitioner represents that it intends to introduce the APA into evidence and seeks to use a transfer pricing method derived from the APA to establish the reasonableness of the allocation of gross receipts between domestic production gross receipts (DPGR) and non-DPGR for purposes of I.R.C. § 199 if the Court holds that part of gross receipts qualifies as DPGR. It asserts that it does not intend to use the APA with respect to the qualification issue.
The APA does not address I.R.C. § 199, which is at issue in these cases, as I.R.C. § 199 does not involve Treaty or sourcing issues.
Treas. Reg. § 1.199-1(d)(2) identifies factors relevant to evaluating the reasonableness of the method allocating gross receipts between DPGR and non-DPGR. These factors include whether the allocation method was used for other Federal or state tax purposes or internal management purposes. Accordingly, an allocation method used for transfer pricing issues is relevant under the regulations. Thus, the APA is relevant. Further, we hold that the APA's admission is not barred by any part of the revenue procedures cited by respondent.
Upon due consideration, it is
ORDERED that respondent's Motion in Limine, filed June 16, 2022, is denied.