On September 2, 2026, the U.S. Tax Court issued its first published opinion in Airbnb, Inc. & Subsidiaries v. Commissioner (167 T.C. No. 9), one of the most significant Transfer Pricing cases currently pending in the United States. The IRS contends that Airbnb undervalued the intangibles made available to its foreign affiliate in 2013 and assessed a tax adjustment of approximately USD 4.2 billion.
The ruling does not yet address the merits of the dispute. It is limited to resolving a procedural issue related to the testimony of an IRS expert during the discovery phase. Nevertheless, it provides insight into how a case involving the valuation of intangibles is built prior to trial and what role experts and the taxpayer’s technical information can play.
What is the core issue in this case?
The dispute centers on the valuation of the intangible assets that Airbnb made available to Airbnb International in 2013, as part of its international structure and Cost-Sharing Agreements (CSAs).
According to Bloomberg Tax, the transaction included technology, products, and intangible assets related to customers and marketing.
| Description | Amount |
| Income adjustment determined by the IRS | USD 4.2 billion |
| Determined Unpaid Tax | USD 1.33 billion |
| Penalties | USD 573 million |
| Total Amount in Dispute for Taxes and Penalties | About USD 2 billion |
Airbnb filed its lawsuit with the Tax Court in 2024, under case no. 12423-24. The company contends that the IRS overvalued the intangibles and that it provided the agency with the economic analyses used to support the valuation of the transaction.
On the other hand, The IRS argues that the original valuation underestimated the value of the resources, capabilities, and rights made available to the foreign entity and, consequently, the corresponding taxable income in the United States.
What did the Tax Court rule in 167 T.C. No. 9?
The Tax Court denied Airbnb’s motion to exclude two statements from a software expert relied upon by the IRS. However, the international company argued that those statements functioned, in practice, as expert reports and, thus, were required to meet the requirements of Rule 143(g) of the Tax Court.
The court concluded that those requirements, which apply to certain expert reports and testimony presented in court, do not extend to statements submitted to support pretrial discovery motions.
The procedural dispute primarily concerns access to Airbnb’s source code and other technical materials through a so-called “clean room”. Airbnb proposed that this space be located at its San Francisco offices or at its attorneys’ offices, while the IRS argued that it should be located in Austin, Texas—where its expert works—under less restrictive access conditions.
Airbnb also argued that some of the statements contained legal opinions. While the Tax Court did not exclude the statements, it clarified that it would not consider those assertions that constituted legal opinions or the parties’ own arguments when resolving the pending issues regarding the protective order.
Why Does a Procedural Ruling Matter in a Transfer Pricing Dispute?
In disputes over intangible assets, technical evidence can play a central role. In fact, the IRS’s interest in having an expert examine the platform’s source code demonstrates that the discussion goes beyond financial valuation models. To determine the asset’s actual value, it is necessary to analyze the technology existing as of the transaction date, evaluating its characteristics, functions, and economic significance to the business.
On the other hand, the court’s decision clarifies that, during the pretrial phase, the parties may rely on statements from specialists without having to comply with all the formalities of expert reports. However, if experts are subsequently called during the trial, the procedural rules for that stage must be strictly observed.
What lessons does this hold for groups with operations in Latin America and the United States?
1. Documentation must stand the test of time
The IRS is reviewing a transaction that took place in 2013—more than a decade before this first published opinion from the Tax Court.
This highlights the importance of ensuring that an intangible asset valuation can be defended using the information available at the time of the transaction and of properly retaining the documents that supported the decisions made.
It is not enough to simply retain the result of the study. Financial projections, contracts, economic analyses, technical information, and other supporting documentation used to determine the value may also become relevant.
2. The valuation of intangibles does not depend solely on the financial model
The economic valuation must be accompanied by an adequate understanding of the asset being analyzed: what technology existed, who was a party to its development, what functions were performed, and what risks were assumed by the various entities.
From an international perspective, this analysis is related to the DEMPE approach (development, enhancement, maintenance, protection, and exploitation), as set forth in Chapter VI of the OECD Transfer Pricing Guidelines.
This does not mean that the Tax Court applied the DEMPE analysis in this ruling. The substantive issue has not yet been decided. However, for multinational groups, the case reinforces the importance of having economic and operational evidence that explains how value is generated from intangible assets.
3. Subsequent results do not automatically mean that the original valuation was incorrect
When an intangible asset subsequently generates results that differ significantly from those projected, the tax authority may review in greater detail the assumptions used in the initial valuation. However, high subsequent returns do not in and of themselves prove that the intangible asset was undervalued.
Under the OECD’s approach to hard-to-value intangibles, certain post-transaction information may be used as evidence to assess whether the projections originally used were reasonable. This must be evaluated by considering the information that was known or foreseeable at the time the transaction took place.
Therefore, it is particularly important to retain documentation explaining the assumptions used in the original valuation.
4. The protection of sensitive information is also part of a dispute over intangible assets
The Airbnb case demonstrates that a Transfer Pricing audit or litigation may require access to highly confidential information, such as source code, technical documentation, and other sensitive business assets.
The taxpayer must strike a balance between providing the information necessary for the tax authority to evaluate the transaction and adequately protecting its assets and confidential information. The dispute over the clean room reflects precisely this tension.
Case still pending
Opinion 167 T.C. No. 9 does not determine whether Airbnb correctly valued its intangibles in 2013, nor does it confirm the adjustment of approximately USD 4.2 billion made by the IRS.
The merits of the litigation remain pending. However, this first published opinion provides a glimpse into the significance that technological evidence, financial documentation, and expert testimony will have as the proceedings move forward.
This case joins other significant litigations involving intangibles and Transfer Pricing in the United States, such as Amgen and 3M, whose developments are important to monitor due to their potential implications for the valuation of intragroup transactions.
At TPC Group, in every analysis of the transfer or licensing of intangibles between related parties, we evaluate the technical and economic information available as of the transaction date, as well as the functions performed by the entities involved. Our goal is to support a technically defensible arm’s-length valuation.