Davis Polk counsel Chris Baratta discussed the decision in Varian Medical Systems v. Commissioner and whether other companies with similar claims may also begin to seek tax refunds with Bloomberg Tax.

In Varian, the first case to consider the validity of a Treasury regulation after Loper Bright (in which the U.S. Supreme Court rejected the longstanding Chevron doctrine), the Tax Court invalidated the regulation in question and ruled that the taxpayer was entitled to the favorable tax treatment provided by a statutory mismatch in effective dates between new Section 245A and a corresponding change to Section 78.

When asked whether other companies might be able to benefit from the deduction in the same way Varian did, Chris said, “It’s a very common fact pattern” and that his “gut instinct is that [there’s] a large number” of companies that could apply the Varian ruling to their own situations.

Chris added that at many companies, the question “is going to be whether it makes sense to do this.”

“Varian Ruling Opens Door for More Companies to Seek Deductions,” Bloomberg Tax (October 2, 2024) (subscription required) 

Copy link to share post