Dr. J. Harold McClure

Dr. McClure has 24 years of transfer pricing and valuation experience. He began his transfer pricing career at the Internal Revenue Service in San Jose, California and has worked for some of the Big Four accounting firms as well as a litigation support entity. Dr. McClure has assisted multinational firms with both U.S. and foreign documentation requirements, IRS audit defense work, and preparing the economic analyzes for bilateral and unilateral Advanced Pricing Agreements.

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Why Did the Appeals Court Vacate the Medtronic Decision?

The Eight Circuit Court of Appeals vacated the June 9, 2016 trial court decision in Medtronic v. Comr. remanding this intercompany litigation “for further consideration in light of the views set forth in this opinion.” The Appeals Court was critical of the use of the Comparable Uncontrolled Transaction (CUT) approach noting several comparability differences between … Read More

CJEU Denies the Hamamatsu Photonics Retroactive Transfer Pricing Adjustment

Co-written by J. Harold McClure and Yanan Li Hamamatsu Photonics is a Japanese manufacturer of various optical devices, which are sold in Europe by Hamamatsu Photonics Deutschland GmbH (HPD). HPD obtained an Advance Pricing Agreement (APA) with the German and Japanese tax authorities that targeted an operating margin. On December 20, 2017, the Court … Read More

UK’s DPT Challenge to Glencore – Can One Defend 80 Percent of the Profits for 20 Percent of the Functions?

Saumyanil Deb and I noted that the UK Diverted Profits Tax should allow taxpayers a chance to defend its intercompany pricing based on a reasonable model of the intercompany transaction in question. In an earlier paper, I posed a simple model of the appropriate gross margin for a sales affiliate, which we applied to the … Read More

Documenting Intercompany Interest Rates: Using Dealscan and Corporate Bond Data

A recent LinkedIn transfer pricing discussion provided an odd answer to a reasonable question about practitioners’ experiences with Dealscan. An attorney at a Big Four accounting firm wrote: I would be concerned that these reported prices do not fully reflect an arm’s length price because often times these banks will lend at a lower rate … Read More

Valuing Gilead’s Intangibles in Light of the Altera Aftermath

Taxpayers are free to structure their intercompany transactions as they wish if the intercompany pricing is consistent with the arm’s length standard. Any evaluation of a transfer pricing issue depends on what the fundamental question is. In my view, the IRS lost Altera because it was asking the wrong question. In this blog, we will … Read More

Evaluating Intercompany Royalty Rates: Why Agree with the IRS Preferred Method?

Imagine a U.S. parent that licenses certain technology to a Canadian affiliate which generates significant profits. While this sounds like good news from a business perspective, the IRS habit of assuming that the royalty should represent all of these residual profits could cause double taxation problems. Interestingly, many economists and the latest from the OECD … Read More