New transfer pricing documentation requirements and penaltie

Three recent events increase the difficulty of tax planning in the area of transfer pricing. First, the Omnibus Budget Reconciliation Act of 1993 amended Sec. 6662 to give more ammunition in transfer cases. Sec. 6662 provides for accuracy-related and fraud penalties in a number of situations, includ...

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Bibliographic Details
Published in:The CPA journal (1975) 1995-04, Vol.65 (4), p.36
Main Authors: Lassar, Sharon S, Skantz, Terrance R
Format: Article
Language:English
Subjects:
Accuracy
Affiliates
Corporate tax planning
Documentation
Fines & penalties
Intangible assets
Internal Revenue Code
Methods
Multinational corporations
OBRA 1993-US
Prices
Profits
Tax regulations
Taxable income
Taxpayers
Transfer pricing
Valuation
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Summary:Three recent events increase the difficulty of tax planning in the area of transfer pricing. First, the Omnibus Budget Reconciliation Act of 1993 amended Sec. 6662 to give more ammunition in transfer cases. Sec. 6662 provides for accuracy-related and fraud penalties in a number of situations, including substantial valuation misstatements due to transfer price adjustments. Second, on July 1, 1994, the IRS filed final transfer pricing regulations with the Federal Register that interpret Sec. 482, which gives the IRS the authority to allocate taxable income across entities under common control to clearly reflect the income of the entities. Finally, on July 5, 1994, the IRS issued amendments to the Sec. 6662 regulations to bring them into closer conformity with the final Sec. 482 regulations.
ISSN:0732-8435