Transfer Pricing Highlights – April 2014

Thomson Reuters Tax & Accounting Newsletters, ONESOURCE May 7, 2014

Welcome to the February edition of the ONESOURCE Transfer Pricing Newsletter, your monthly source for the latest transfer pricing news. Each edition will feature articles and insight to keep you apprised on current events in the transfer pricing industry, as well as exciting things we are working on at Thomson Reuters ONESOURCE.

We hope you find this piece informative and enjoyable! If there is anything you would like to see featured or addressed, please contact us.

WHAT’S NEW

DEBTOR’S OBJECTION TO IRS’S CLAIM SUSTAINED

This recent case involves a Transfer Pricing win for DeCoro USA, Limited. Their objection to a section 482 adjustment from IRS was sustained due to flawed transfer pricing analysis.

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MANAGING PRE-EXAM PHASE OF AUDIT LEADS TO BETTER OUTCOME, PRACTITIONERS, IRS AGREE

A key element of the Internal Revenue Service’s recently released Transfer Pricing Roadmap is a greater emphasis on dialogue between examiners and taxpayers at the beginning of the process, practitioners and IRS officials said March 26.

>>Read More

TRANSFER PRICING DEFEAT FOR THE UK GOVERNMENT

The taxpayer in this particular UK case had incurred significant upfront costs, which became a deferred tax asset. The taxpayer had wished to allocated these upfront costs to its various UK affiliates to offset some of their current profits. While this ruling allows the taxpayer to do so, the reasonableness of the allocation would generally need to be demonstrated as reasonable along typical transfer pricing principles.

>>Read More

Ask a Transfer Pricing Expert

Question: Our European affiliates have been enjoying substantial profit margins using technology licensed from the U.S. parent. While our intercompany pricing policy has been for the European affiliates to pay the U.S. parent royalties equal to 10 percent of sales, the IRS has traditionally argued for higher royalty rates and the European tax authorities have suggested that the royalty rate should be reduced. As such, we are considering selling the European rights to the technology and were wondering what are the key elements to establish the fair market value under section 367(d)?

Click here to see the answer

 

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