What is the current state of the law on cost-sharing in the intangible development area?

The regulations also set forth methods by which income could be allocated among related parties in a manner consistent with the arm's length standard. 1.482-1(b)(2)(i) (1994). Absent from the list of approved methods was the method outlined in the singular cost-sharing regulation separately issued in 1995, 1.482-7. The 1995 regulation provided that intangible development costs included "all of the costs incurred by . . . [an uncontrolled] participant related to the intangible development area." Treas. Reg. 1.482-7(d)(1) (1995). Beginning in 1997, the Secretary interpreted the "all . . . costs" language to include stock-based compensation, meaning that controlled taxpayers had to share the costs (and associated deductions) of providing employee stock compensation. Xilinx v. Comm'r, 598 F.3d 1191, 1193-94 (9th Cir. 2010).