International Taxation: Problems Persist In Determining Tax Effects Of Intercompany Transfer Prices

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DIANE Publishing, 1992 - Business & Economics - 120 pages
Covers: whether foreign-controlled companies might have underpaid U.S. income taxes by improperly using transfer pricing; what factors, if any, affected the IRS1 ability to determine and recover any potentially underpaid taxes; and what alternatives to dealing with transfer pricing existed. Charts and tables.

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Page 62 - See Edward M. Graham and Paul R. Krugman, Foreign Direct Investment in the United States (Washington, DC: Institute for International Economics, 1989), esp.
Page 23 - B system contractors' offices. We performed our work from October 1996 through April 1997, in accordance with generally accepted government auditing standards. HI is and OMB provided written comments on a draft of this report. Their comments are presented and evaluated in chapters 2, 3, and 4, and are included in appendixes I and n.
Page 18 - January 1993, a controlled transfer of tangible property could be subject to one of four "specified methods": the comparable uncontrolled price method, the resale price method, the cost plus method, or the comparable profits method (Treas. Reg. sec. 1.482-3T(aXD-(4)). Any other method would not be a "specified" method for purposes of this penalty provision.
Page 131 - Although data showing differences between foreign- and US -controlled corporations could indicate potential transfer price abuse by foreigncontrolled corporations, they do not prove such abuse. We concluded in our 1992 report that other factors, such as attempts to increase market share, newness of investment, extent of leverage, and fluctuating exchange rates can also contribute to the differences.
Page 17 - Commissioner may distribute, apportion or allocate gross income between them In order to prevent tax evasion or to clearly reflect the income of such business organizations.
Page 17 - ... or to the case of a device designed to reduce or avoid tax by shifting or distorting income, deductions, credits, or allowances. The authority to determine true taxable income extends to any case in which either by inadvertence or design the taxable income, in whole or in part, of a controlled taxpayer, is other than it would have been had the taxpayer in the conduct of his affairs been an uncontrolled taxpayer dealing at arm's length with another uncontrolled taxpayer.
Page 20 - IRS Could Better Protect US Tax Interests in Determining the Income of Multinational Corporations (GGD-81-81) , Washington, DC, US General Accounting Office, September 30, 1981.
Page 94 - London Model" treaty in 1946, and carried on later by the United Nations, and the Committee on Fiscal Affairs of the Organization for Economic Cooperation and Development ("OECD"). The US first signed a bilateral tax treaty in 1932 with France, which treaty never went into force. The first effective treaty, also with France, was signed July 25, 1939, and came into force on January 1, 1945.
Page 24 - According to the report, the data do not prove that [foreign controlled corporations] have set improper transfer prices because other factors, such as attempts to increase market share, newness of investment, extent of leverage, fluctuating exchange rates, and managerial skills and experience, can contribute to the differences.
Page 144 - Foreign- and US -Controlled Corporations That Did Not Pay US Income Taxes, 1989 ~ """" ~ """ " " ~ ~ " ~ " Note 1: Totals may not add due to rounding. Note 2: Figures were obtained from weighted estimates based on samples, with weights provided by 1RS, and they are subject to sampling error.

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