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Internal Revenue Code Section 482 and Transfer Pricing - Assignment Example

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"Internal Revenue Code Section 482 and Transfer Pricing" paper focuses on the code that empowers the IRS to adjust various allowances, credits, or loans as well as other deductions while computing the income for the purpose of payment of tax, which mainly incorporates transfer pricing…
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Internal Revenue Code Section 482 and Transfer Pricing
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Download file to see previous pages Section 482 broadly deals with the prices charged by a company while transferring goods from one associate to the other. This is deemed as an intercompany transaction and under section 482 such transactions should result in the same taxation procedure as would have been if the transaction was taking place between the MNC and its non-affiliate. The aim is usually to ensure that the tax payment is done in a reasonably fair manner, without any bias and there is no attempt to evade tax............(reported by IRS, transfer pricing)

As per the IRS section code 482, the secretary responsible for deduction of taxes can decide on the deductions and allocation of income, credit or allowances, etc, in case the same can prevent the evasion of taxes; while two or more trade organizations, whether affiliated or not, transact business among themselves.

Modification of revenue procedure 2006-9 (sec 2.01) further states that IRS and the taxpayers can resolve all the issues related to the transfer pricing under section 482 of the internal revenue Code under Income tax regulations, on a prospective basis. This is defined in the “advanced Pricing Agreement” (APA) program, which provides for the resolution of all the issues between the taxpayer and the authorities under certain income tax treaties, codes or regulations, within the relevant transfer pricing principals. This will be determined in relation to the income generated by the taxpayer company within and outside of the United States, and other concerning issues related to the same.
While aiming at the more tax compliance by the taxpayers, the APA program is based on the openness and cooperation as well as discussion, to encourage the taxpayer for presenting all relevant facts so that a better transfer pricing methodology can be in place. This should result in a mutually satisfying agreement between the taxpayer and the regulators.............( as per modification of Rev proc 2006-9) ...Download file to see next pagesRead More
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