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Practical Guide to U.S. Transfer Pricing, Third Edition

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ISBN: 9780820569499
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Transfer pricing is one of the hottest topics in international tax today. Transfer pricing rules are an inescapable part of doing business internationally, and this third edition of Practical Guide to U.S. Transfer Pricing provides an in-depth analysis of the U.S. rules. This product is designed to help multinationals cope with the U.S. transfer pricing rules and procedures, taking into account the international norms established by the Organisation for Economic Co-operation and Development (OECD). It is also designed for use by tax administrators, both those belonging to the U.S. Internal Revenue Service and those belonging to the tax administrations of other countries, and tax professionals in and out of government, corporate executives, and their non-tax advisors, both American and foreign.

The U.S. rules are presented along with ideas on how to apply them in a common-sense fashion in a multi-jurisdictional world. A few of the highlights in the latest update to the treatise are as follows:

The most important development in transfer pricing ending July 2015 has been the momentum of the OECD's Base Erosion and Profit Shifting (''BEPS'') initiatives, and their forthcoming impact on the European Union, United Nations, and domestic transfer pricing policies. Of particular impact are the OECD initiatives regarding documentation and reporting, relation to risks and capital, and intangibles. 

In December 2015, the OECD still plans to deliver a discussion draft on changes to the transfer pricing rules to limit base erosion via interest deductions and other financial payments. Of the OECD 2015 developments, the most impactful is the Country-by-Country Reporting. The OECD BEPS country-by-country reporting initiative is receiving, in particular among developing countries, widespread interest and adoption for 2016 by many countries.

In new chapter ''Application of the Comparable Profit Split Method (CPSM) to Business Service Providers,'' we examine compensation data from a recent study to discuss how the CPSM may be applied in practice. Business service companies, especially professional, scientific, and technical service providers, can readily produce compensation data from existing accounting systems and such data can be a reliable proxy to define economic ownership of intercompany profits. 


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Table of Contents

CHAPTER 1: Overview of Transfer Pricing
CHAPTER 2: Framework for U.S. Transfer Pricing Analysis Under Treasury Regulation Section 1.482-1 -- OECD Guidelines Compared
CHAPTER 3: Determination of Related Person Status
CHAPTER 4: Finding and Selecting Comparables
CHAPTER 5: Comparable Uncontrolled Price (CUP) Method
CHAPTER 6: Resale Price Method (RPM) and Alternatives to Traditional Buy-Sell Distributors
CHAPTER 7: Cost Plus Method
CHAPTER 8: Transfer Pricing Rules and Methods for Intangible Property
CHAPTER 9: Comparable Profits Method
CHAPTER 10: Profit Split Methods
CHAPTER 11: Unspecified Methods
CHAPTER 12: Functional Analysis and Choosing the Best Method
CHAPTER 13: Cost Sharing Arrangements
CHAPTER 14: Transfer Pricing for Services Under the 1968 and 2009 Treasury Regulations
CHAPTER 15: Determining Arm's Length Interest and Rent
CHAPTER 16: Financial Industry Transfer Pricing Issues
CHAPTER 17: Second-Level Effects of Transfer Pricing Adjustments
CHAPTER 18: Documented Self-Compliance and Transfer Pricing Penalties
CHAPTER 19: Advance Pricing Agreements (APAs)
CHAPTER 20: IRC Sections 6038A and 6038C: Record-Keeping, Record Production, and Reporting for Foreign-Owned Groups
CHAPTER 21: Examination and Appeals
CHAPTER 22: Competent Authority to Avoid Double or Excessive Taxation From Transfer Pricing Adjustments
CHAPTER 23: Transfer Pricing Litigation
CHAPTER 24: Relationship of Section 482 to Other Code Sections
CHAPTER 25: Transfer Pricing Effects of Customs Actions and Customs Effects of Transfer Pricing Actions
CHAPTER 26: State Tax Transfer Pricing Issues
CHAPTER 27: International Strategy for Transfer Pricing Compliance: A Checklist for Multinationals
CHAPTER 28: Transfer Pricing Aspects of Business Restructurings -- Chapter IX of the OECD Guidelines
CHAPTER 29: Application of the Comparable Profit Split Method (CPSM) to Business Service Providers
CHAPTER 30: Mitigation of Transfer Pricing Risks with ISO 9001 Certification
CHAPTER 31: New Challenges in Defending Intercompany Debt
CHAPTER 32: The Value Chain: A Study of the Coffee Industry
APPENDIX A: Table of Transfer Pricing Acronyms and Definitions
APPENDIX B: Announcement 2016-12, 2016-16 IRB 589
APPENDIX C: What Every Member of the Trade Community Should Know About: Determining the Acceptability of Transaction Value for Related Party Transactions (An Informed Compliance Publication (April 2007) from U.S. Customs and Border Protection, U.S. Department of Homeland Security)