On 3 February 2023, the United States (US) Tax Court issued a stipulation approving an agreement between Eaton Corp. (Eaton) and the Internal Revenue Service (IRS) to adjust Eaton's tax bill for 2005 and 2006 to US$8.81 million.2 The proposal follows lengthy litigation in both the Tax Court and the Sixth Circuit Court of Appeals.The case originated with Eaton's inadvertent errors in calculating its transfer pricing methodology for its Advance Pricing Agreement (APA) annual reports in 2005 and 2006 (see EY Tax Alert 2022-1334 for an in-depth history). The IRS used these inadvertent errors to justify cancelling Eaton's APAs and proposing a $75...