In a generic legal advice memorandum (GLAM) the Internal Revenue Service (IRS) Office of Chief Counsel (AM 2021-004) addressed its views on the treatment of stock-based compensation (SBC) costs in cost sharing agreements that include a "reverse claw-back" provision, but do not share SBC costs (non-SBC CS agreements).

The IRS asserted that it can make certain allocations to make the cost sharing tra…