Amazon vs. Commissioner: Has Cost Sharing Outlived Its Usefulness?

5 Pages Posted: 2 May 2017 Last revised: 13 May 2017

Date Written: May 1, 2017


President Trump has decreed that for every new regulation, two old regulations should be repealed. The next time the IRS wishes to adopt a new tax regulation, I have two candidates for repeal: cost sharing and “check the box”, the 1997 regulation that enables US-based multinationals to shift profits from high to low tax foreign jurisdictions without triggering US tax. Both of those regulations run directly contrary to the intent of Congress in enacting Subpart F (the CFC rules) in 1961 and amending Code section 482 by adding the super royalty rule in 1986. They are the technical building blocks underlying the ability of US based multinationals to avoid US tax on profits economically earned in the US. It is high time for both of them to go.

Keywords: Transfer pricing, cost sharing

JEL Classification: H26

Suggested Citation

Avi-Yonah, Reuven S., Amazon vs. Commissioner: Has Cost Sharing Outlived Its Usefulness? (May 1, 2017). U of Michigan Law & Econ Research Paper No. 17-003, U of Michigan Public Law Research Paper No. 551, Available at SSRN: or

Reuven S. Avi-Yonah (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4033 (Phone)

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