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Douglas Stransky was quoted in the article "Facebook Ruling Casts Uncertainty On Cost-Share Disputes," published by Law360 Tax Authority [sub. req'd] on June 6, 2025.

The U.S. Tax Court's recent decision upholding the IRS's cost-sharing regulations challenged by Facebook complicates similar challenges by pharmaceutical companies McKesson and Abbott Laboratories, who are contesting the inclusion of stock-based compensation in cost-sharing arrangements. Although the Facebook decision supports the IRS's commensurate with income (CWI) approach, the case also has broader implications, particularly regarding the Administrative Procedure Act (APA) and the Supreme Court’s recent Loper Bright decision.

Doug explains that the APA claims are separate from statutory interpretation issues, and even if courts find the statutory language unambiguous in the Abbott or McKesson cases, they might still overturn the stock-based compensation rules if Treasury violated the APA requirements. Stransky notes that while Section 482's CWI language might be clear, it doesn't mention stock-based compensation, and Treasury must adhere to procedural requirements if it wants to include it. "'Whatever Treasury says it to mean is why it promulgates regulations,'" he says. "'And those regulations have to be promulgated pursuant to the APA.'"

These APA claims are particularly relevant to the McKesson and Abbott cases, as they could potentially invalidate the stock-based compensation rules independently of statutory interpretation issues.