On August 16, 2019, the United States (U.S.) Court of Appeals
for the Ninth Circuit (the Court) issued its opinion in the case of
Amazon.com, Inc. & Subsidiaries v.
Commission of Internal Revenue, finding in favor of the
taxpayer. This case pertains to the arm's-length nature of a
buy-in payment made by a Luxembourg subsidiary of Amazon for
pre-existing intangible property associated with a cost sharing
arrangement entered in 2005.
Amazon.com. Inc. originally recorded a buy-in payment of $255
million, which was recalculated by the Commissioner to be
approximately $3.6 billion. To arrive at its value, the
Commissioner applied a methodology which identified all
non-routine/non-benchmarkable income as the income associated with
the transferred intangibles. In doing so, the Commissioner
essentially argued that all intangible assets of value, including
"residual-business assets" such as goodwill and going
concern value, were compensable intangibles under the
