Inc. (AMZN): Apple Inc. (AAPL), MP3s and the IRS

It might be appropriate that music is featured in some news surrounding Inc. (NASDAQ:AMZN) Thursday afternoon, because it seems that the online retailer is trying to do a couple of tap dances around a couple of rivals that would look to gain some of the company’s riches.

One is the Internal Revenue Service. The other is Apple Inc. (NASDAQ:AAPL). Let’s polka!

FIRST DANCE: THE TAX MAN COMETH (NASDAQ:AMZN), The Washington Post (NYSE:WPO), Berkshire Hathaway Inc. (NYSE:BRK.A), Apple Inc. (NASDAQ:AAPL) Inc. (NASDAQ:AMZN) has had much commercial success as a retailer in the last few years, but the IRS has come knocking about some allegedly unpaid tax bills from 2005 and 2006, which the feds claim total more than $230 million. The IRS has indicated some issues with the company’s “transfer pricing” structure, in which the company buys something in one country that benefits the entire company, then sells it to regional branches at a markup. Amazon on the other hand, contends that the $234 million number overestimates the value of the company’s “intangible assets” like software and trademarks.

This came from a court filing discovered by Reuters.


The other dance by the footloose Inc. (NASDAQ:AMZN) involves the development of its new mobile MP3 store for iPhone nd iPod Touch devices, with a clever twist. The new portal is a Web app, which device users can access with the Safari browser. The Web app, instead of developing an app for download from the Apple App Store, means that Amazon bypasses the 30-percent cut that Apple receives from every app in the App Store and everything that is bought within an app.

Those who use the Web app can download music and play it instantly with the Amazon Cloud Player app, or the music can be downloaded into an iTunes library through the Cloud Player on a computer. The company reports that this new store will provide deals like entire albums for $5 each and individual songs for as little as 69 cents – something not likely to happen if the company had to pay Apple Inc. (NASDAQ:AAPL) Inc. (NASDAQ:AMZN) stock was up about $1.50 on the day Thursday to $270.48 a share.

What do you think about the dancing ability of Inc. (NASDAQ:AMZN)? If you had a choice, would you rather pay the IRS or pay Apple Inc. (NASDAQ:AAPL)? Do you think Amazon will come out of both of these items unscathed? Let us know your thoughts about this company.

DISCLOSURE: I own no position in any stock mentioned.

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