Seagate Technology, Inc., Successor in Interest to Seagate Peripherals, Inc., f.k.a. Conner Peripherals, Inc.. - Page 1

                                 T.C. Memo. 2000-388                                  

                               UNITED STATES TAX COURT                                

           PERIPHERALS, INC., f.k.a. CONNER PERIPHERALS, INC., Petitioner             
                   v. COMMISSIONER OF INTERNAL REVENUE, Respondent                    

               Docket No. 15086-98.                Filed December 22, 2000.           

                    P, a domestic corporation, entered into a cost-                   
               sharing agreement with its foreign subsidiaries in                     
               connection with certain intangibles that were                          
               transferred to the subsidiaries.  R determined that P                  
               should have included in the cost-sharing pool the cost                 
               of stock options for P’s employees who performed the                   
               research and development regarding the intangibles.                    
               Where there is a bona fide cost-sharing arrangement, R                 
               may make allocations only “to reflect each                             
               participant’s arm’s-length share of the cost of the                    
               risks of developing the property.”  Sec. 1.482-2(d)(4),                
               Income Tax Regs.  P contends that R is limited to                      
               making allocations only where R is aware of actual                     
               arm’s-length circumstances where the cost of stock                     
               options is shared.  P also contends that for purposes                  
               of summary judgment, R’s reliance on an expert’s                       
               opinion is not a “fact” for purposes of deciding                       
               whether the parties have a genuine dispute about a                     
               material fact.                                                         

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