Tag: Coca-Cola

US vs Coca Cola, Dec. 2017, US Tax Court, 149 T.C. No. 21

US vs Coca Cola, Dec. 2017, US Tax Court, 149 T.C. No. 21

Coca Cola collects royalties from foreign branches and subsidiaries for use of formulas, brand and other intellectual property. Years ago an agreement was entered by Coca Cola and the IRS on these royalty payments to settle an audit of years 1987 to 1995. According to the agreement Coca-Cola licensees in other countries would pay the US parent company royalties using a 10-50-50 formula where 10% of the gross sales revenue is treated as a normal return to the licensee and the rest of the revenue is split evenly between the licensee and the US parent, with the part going to the US parent paid in the form of a royalty. The agreement expired in 1995, but Coca-Cola continued to use the model for transfer pricing in the following years. Coca-Cola and the Mexican tax authorities had agreed on the same formula and Coca-Cola continued to use the pricing-formula in Mexico on the advice of Mexican counsel. In 2015, the IRS ... Continue to full case

US v Coca-Cola, December 2015. US Tax Court

The Coca-Cola Company submitted a petition to the U.S. Tax Court, requesting a redetermination of the deficiencies in Federal income tax for the years ended December 31, 2007, 2008 and 2009, as set forth by the Commissioner of Internal Revenue in a Notice of Deficiency dated September 15, 2015. The total amount in dispute is over $3.3 billion for the 3-year period. Major issues in the dispute include the method used to allocate profit to seven foreign subsidiaries, which use licensed trademarks and formulas to carry out the manufacture and sale of beverage concentrates in markets outside of the United States, as well as the application of correlative adjustments for foreign tax credits. The Coca-Cola Company claims that it used the same allocation method that had been reviewed and approved by the Internal Revenue Service during audits of tax years from 1996 through 2006, the same that was established in a Closing Agreement with respect to the 1987 through 1995 ... Continue to full case