Cadence Design Systems Inc. said that it will protest the Internal Revenue Service's decision to seek $324 million in back taxes from the electronic design automation company.
In a statement, Cadence said that the taxes are for the 2000-2002 tax years and that interest would continue to accrue until the matter is resolved.
"Cadence believes that the proposed IRS adjustments are inconsistent with applicable tax laws, and that Cadence has meritorious defenses to the proposed adjustments," the filing said. Cadence is headquartered in San Jose, Calif., but has a number of international subsidiaries.
The IRS' review, which wrapped up last month, contested Cadence's qualification for deferred recognition of proceeds received from restitution and settlements in connection with litigation -- a tax deficiency the agency estimates at $150 million. Approximately another $170 million in deficiencies are related to proposed adjustments to transfer pricing arrangements that Cadence has with foreign subsidiaries, and to the company's deductions for foreign trade income.
Synopsys Inc., Cadence's rival, remains involved in a dispute with the IRS over $476 million in back taxes, which centers on transactions between Synopsys and its Irish subsidiary. Cadence is involved in an ongoing dispute with the IRS over a claimed tax deficiency of $124 million for 1997-1999, primarily related to transfer pricing arrangements with its Irish subsidiary, a dispute still being considered by the IRS Appeals Office.
Previously on WebCPA:
IRS Chasing Symantec for $1B in Taxes (April 19, 2006)
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