A three-judge panel of the 9th Circuit has ruled against Intel in a case that was watched closely in Silicon Valley. The panel sided with the IRS and ruled that the chipmaker broke the law when it tried to shift some of its stock-based compensation to overseas subsidiaries in an attempt to lower its tax bill. The issue is whether companies can transfer expenses to foreign subsidiaries that are incorporated in countries with lower corporate tax rates. The IRS has made a concerted effort to close accounting loopholes that allowed Alphabet, Cisco Systems, and others to pay technology royalties to their offshore shell companies, thus reducing their U.S. tax bill. The Intel case targets the transfer of stock-based compensation expenses. Alphabet claims it stood to gain $3.5 billion on its balance sheet if Intel had won the case. Intel is pondering whether to challenge the ruling.