Regulations clarify penalty provisions for transfer pricing valuation adjustments

IRS temporary regulations have identified methods taxpayers may use to show that the taxpayer's transfer pricing valuation method was reasonable, but the regulations have not provided a complete safe harbor. The corporate taxpayer may be subject to penalties on additional tax due for substantia...

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Bibliographic Details
Published in:Journal of accountancy 1994-05, Vol.177 (5), p.32
Main Author: Burge, Marianne
Format: Magazinearticle
Language:English
Subjects:
Fines & penalties
Internal Revenue Code
Laws, regulations and rules
Multinational corporations
Section 482
Section 6662
Tax penalties
Tax underpayment
Taxpayers
Temporary tax regulations
Transfer pricing
Valuation
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Summary:IRS temporary regulations have identified methods taxpayers may use to show that the taxpayer's transfer pricing valuation method was reasonable, but the regulations have not provided a complete safe harbor. The corporate taxpayer may be subject to penalties on additional tax due for substantial or gross understatement of the valuation of property transferred between affiliates. Documentation and use of methods defined in IRC section 482 can minimize the possibility that the IRS will find that the method used was not reasonable and did not adequately reflect income.
ISSN:0021-8448
1945-0729