Customs ‘First Sale Rule’ Use Not Trigger for Transfer Pricing Adjustment

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The IRS Office of Chief Counsel, in a chief counsel advice memorandum, says a transfer pricing adjustment is not warranted where property imported into the United States in a related-party transaction is valued differently for income tax purposes than its valuation under customs law pursuant to the “first sale rule.” The office says such a difference between valuations for customs law purposes and for income tax purposes does not violate Section 1059A where the difference falls under the exception in Treasury Regulations Section 1.1059A-1(c)(2)(iv).