Seagate Technology, Inc., Successor in Interest to Seagate Peripherals, Inc., f.k.a. Conner Peripherals, Inc.. - Page 4




                                        - 4 -                                         
               Respondent counters that:  (1) Section 1.482-2(d)(4)4 and              
          (b)(4), Income Tax Regs., requires that “all costs” be included             
          in cost-sharing arrangements, and “all costs” include employee              
          stock options; and (2) there are disputed material facts                    
          concerning whether arm’s-length parties would share the cost of             
          stock options granted to employees who performed the research and           
          development for the transferred intangible.                                 
                                     Background                                       
               Petitioner is the successor in interest to Conner                      
          Peripherals, Inc. (Conner Domestic), which developed and                    
          manufactured hard disk drives for sale to personal computer                 
          manufacturers and others.  Effective January 1, 1988, Conner                
          Domestic and its wholly owned foreign manufacturing subsidiary,             
          Conner Peripherals Singapore, Ltd. (Conner Foreign 1), entered              
          into a cost-sharing agreement.  Effective July 1, 1990, Conner              
          Domestic, Conner Foreign 1, and Conner Domestic’s wholly owned              
          Singapore corporation, Conner Peripherals Pte., Ltd., entered               
          into a new cost-sharing agreement for sharing research and                  
          development (R&D) costs, and the 1988 cost-sharing agreement was            


               4 Sec. 1.482-2(d), Income Tax Regs., was amended in 1993,              
          and respondent refers to the amended version (sec. 1.482-2A(d),             
          Income Tax Regs.) in his materials.  Petitioner, on the other               
          hand, refers to the unamended version.  While the years we                  
          consider predate the amendment, the amended version, to the                 
          extent pertinent here, has not been changed.  Accordingly, the              
          references used by the parties are interchangeable.                         






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011