Financial Analysis
EQUITY, BUSINESS ENTITIES, ESTATES, INTANGIBLES, AND ECONOMIC VALUE

Special Topics:

• International Services - Federal Tax Issues
• Interest Expense Attribution (864e)
• Intercompany Transfer Pricing (482)
• Due Diligence
• Valuing Intellectual Property
• Insolvency Valuations Under IRC (108b)
• Accounting for the Impairment of Long-Lived Assets (FASB 121)
• Accounting for Acquired "In Process" Research & Development Costs (FAS 2)

Intercompany Transfer Pricing

IRC §482

Today, many companies grapple with the complexities of intercompany transfer pricing, dealing with questions such as: What is appropriate arm's- length pricing; and, what is the best method for providing contemporaneous documentation which will hold up to third party scrutiny? Since the work required to substantiate transfer pricing is fundamentally economic analysis and not accounting, many businesses turn to the in-depth expertise of Arthur Consulting Group, Inc.

Arthur Consulting Group is an independent, international consulting firm specializing in economic and financial analysis, valuation, and taxation. We can analyze the fairness of transfer prices in accordance with IRC §482, and supply you with the necessary written support to meet the contemporaneous documentation requirements of the regulations. In addition, if we determine that there may be a problem or exposure in pricing policies or practices, we will alert you to this and discuss alternative options.

ABOUT IRC §482

Under IRC §482, the transfer of products across national boundaries must meet a test of fairness, generally considered to be an arm's-length standard. This standard ensures that each taxing jurisdiction gets its fair share of tax revenues by requiring that the entities recognize a fair share of income in the jurisdiction. In the United States, companies must also maintain contemporaneous documentation showing that their prices were objectively derived before the fact, not conveniently derived after the fact. Companies failing to meet the arm's-length standard may have their taxable income adjusted by the IRS. Companies which fail to comply with the contemporaneous documentation requirement may further be subject to substantial penalties.