Transfer Pricing: Introductory Materials is the first Portfolio in Bloomberg BNA’s Tax Management Transfer Pricing Portfolio Series. This Portfolio provides background information relevant to the Series. Written by John P. Warner, Esq., Buchanan, Ingersoll & Rooney, PC, this detailed analysis consists of an introductory example which follows a hypothetical transfer pricing scenario from the gathering of pricing information and choosing a methodology through all of the possible post–return procedural steps. Through extensive cross–references to the other portfolios, this example provides a “road map” to the Transfer Pricing Portfolio Series and illustrates the issues that can arise at each stage of a transfer pricing situation.
Although the literature concerning transfer pricing issues is generally of high quality, many subjects having practical importance have not been treated in detail. Moreover, no single service has combined all of the major aspects of this highly specialized area of the law. The Tax Management Transfer Pricing Portfolio Series presents all aspects of transfer pricing practice in an integrated and comprehensible format.
The Transfer Pricing series represents a comprehensive treatment of the economic, legal, accounting, financial and administrative aspects of §482 transfer pricing issues. Chapter 1 (887 T.M.) contains comprehensive analyses of the 1968 and 1994 transfer pricing regulations, while Chapter 3 (888 T.M.) discusses the major judicial interpretations of §482.
The Transfer Pricing series also devotes substantial attention to the non–tax underpinnings of transfer pricing analysis. Chapter 4 (889 T.M.) covers the economic principles behind establishing and administering defensible transfer prices. Chapter 5 (889 T.M.) analyzes the managerial and organizational factors to be considered in understanding and defending intercompany pricing, while Chapter 6 (889 T.M.) provides an in–depth discussion of the accounting principles implicated in transfer pricing analysis. Chapter 7 (890 T.M.) presents a detailed case study demonstrating an approach to selecting and implementing a transfer pricing methodology.
Important alternatives to traditional transfer pricing arrangements are explored in Chapter 9 (890 T.M.), dealing with cost sharing agreements, and in Chapter 10 (890 T.M.), discussing international joint ventures. A significant portion of the series is devoted to dealing with the compliance burdens imposed on intercompany transactions. Chapter 12 (891 T.M.) outlines the procedural and strategic considerations in transfer pricing audits and administrative appeals and discusses application of the transfer pricing penalties. Chapter 13 (891 T.M.) analyzes the factors to be considered in responding to IRS document requests.
The Transfer Pricing series contains a thoughtful and comprehensive treatment of transfer pricing litigation procedure, tactics and strategy in Chapter 2 (888 T.M.). But the series also focuses on possible means of avoiding litigation. Chapter 8 (890 T.M.) provides detailed guidance on the advance pricing agreement process while Chapter 9 (890 T.M.) addresses resolution of international transfer pricing disputes through the competent authority procedures in U.S. treaties.
Of potentially great interest to those who deal with multinational enterprises, the Transfer Pricing series includes perhaps the most detailed published treatment of the transfer pricing rules and practices of some of our leading trading partners. Separate chapters are devoted to the transfer pricing rules and practices of France (Chapter 21, 895 T.M.), the United Kingdom (Chapter 22, 895 T.M.), Germany (Chapter 23, 895 T.M.), Denmark (Chapter 24, 896 T.M.), Belgium (Chapter 25, 896 T.M.), Italy (Chapter 26, 896 T.M.), Sweden (Chapter 27, 896 T.M.), Switzerland (Chapter 28, 896 T.M.), Canada (Chapter 31, 897 T.M.), Mexico (Chapter 32, 897 T.M.), Japan (Chapter 33, 897 T.M.), and Korea (Chapter 34, 898 T.M.), Australia (Chapter 35, 898 T.M.), and Brazil (Chapter 36, 898 T.M.).
Each of the chapters is written by leading practitioners in the transfer pricing area. Therefore, not only does the series contain thorough analyses of the relevant rules and principles, but also extensive practical advice as to how those rules and principles may be applied in real–world situations. In addition to the detailed discussion of the relevant legal issues, the Transfer Pricing series includes extensive planning tips and strategies for tax advisers, litigators, tax managers and others charged with establishing transfer prices, economists and other potential witnesses in transfer pricing disputes, and describes the likely impact that a given action or strategy might have on other aspects of transfer pricing. The implications of transfer pricing rules and strategies are applied to numerous potential factual scenarios, including inbound vs. outbound pricing, unique vs. fungible goods, and settlement vs. litigation strategies.
In addition to the chapters themselves, the series contains the 1968, 1992, 1993, 1994, and more recent versions of the transfer pricing regulations, analysis of the expert reports and testimony in Bausch & Lomb, Inc. v. Comr.and Westreco, Inc. v. Comr., relevant revenue procedures and revenue rulings, a table summarizing the issues decided in the leading §482 cases, and an analysis of the worldwide net financial and tax implications from a hypothetical competent authority settlement with several of the U.S.'s leading treaty partners. Sample advance pricing agreements, cost sharing agreements, as well as other helpful documents, have also been included. The treatise also contains the relevant statutory, regulatory, and administrative provisions governing transfer pricing in many of the major industrialized countries.
The Working Papers contain the text of Code §482, and the text of three sets of regulations under that section: the 1994 final regulations, the 1993 temporary regulations, and the 1968 regulations.
Transfer Pricing: Introductory Materials allows you to benefit from:
This Portfolio is part of the Foreign Income Portfolios Library, a comprehensive series containing more than 90 Portfolios, which covers critical transactions and issues in international taxation. This highly-regarded resource service offers commentary on a wide range of foreign income topics including: Foreign Tax Credit, Business Operations in more than 40 foreign countries, Branch Profits Tax, Source of Income Rules, Subpart F (Controlled Foreign Corporations), Foreign Partnerships and Partners, Transfer Pricing, and more.
Detailed Analysis
I. Example
A. Background Facts
B. USS Operations
II. Tax Disputes
A. 1988-1989 Taxable Years
1. IRS Audit of 1988 and 1989 Taxable Years
a. Initiation of Audit
b. IRS Document Request
c. Proposed IRS Adjustments
d. USS Options After Audit
2. IRS Appeals Office Consideration of 1988 and 1989 Taxable Years
a. Protest
b. Appeals Office Response
c. USS Counterproposal
3. Competent Authority Consideration of 1988-89 Taxable Years
B. 1990-1991 Taxable Years
1. 1990-1991 Audit
a. IRS Document Requests
b. Proposed IRS Adjustments
c. Options Available to USS
2. IRS Appeals Office Consideration of 1990-91 Taxable Years
a. Taxpayer Protest
b. Appeals Office Conference
c. Taxpayer Counterproposal
d. Terms of the Settlement
3. Competent Authority Consideration of 1990-91 Taxable Years
C. 1992-1994 Taxable Years
1. Reported Results
2. Audit of 1992-1994 Taxable Years
3. Appeals Office Consideration of 1992-1994 Taxable Years
a. D'Andrea Study of Comparable Distributors
(1) Functional Analysis
(2) Arm's Length Range
(3) Use of Multiple Year Data
(4) Selection of Best Method
(5) Comparability Adjustments
(6) Results of the Study
4. Competent Authority Resolution of 1994 Adjustment
D. 1995 and Beyond
1. Consideration of Advance Pricing Agreement
2. Consideration of Cost Sharing Agreement
Working Papers
Table of Worksheets
Worksheet 1 Consumer Products Comparability Analysis of Financial Results Three Year Average of 1992-1994
Worksheet 2 Consumer Products Comparability Analysis of Financial Results for 1994
Worksheet 11 IRC Section 482
Worksheet 12 1994 Final Section 482 Regulations.
Worksheet 13 1993 Temporary and Proposed Section 482 Regulations.
Worksheet 14 1968 Section 482 Regulations.
Bibliography
OFFICIAL
Statutes:
Treasury Rulings:
Cases:
UNOFFICIAL
Periodicals: