Income Shifting: Common Ownership Or Control Under Code §482 In An Inbound Transaction

INTRODUCTION

The Large Business and International Division of the I.R.S. ("LB&I") periodically develops international practice units ("I.P.U.'s") that serve as training material for international examiners. I.P.U.'s provide explanations of general tax concepts and information about a specific type of transaction. Because I.P.U.'s are not official pronouncements of law, they cannot be used, cited, or relied upon as authority. Nonetheless, they explain the general approach that will be followed by an LB&I examiner and are helpful when preparing for an I.R.S. examination of a multinational group.

In November 2017, the I.R.S. issued an I.P.U. entitled "Common Ownership or Control Under IRC 482 – Inbound." It serves as a primer for determining whether sufficient control exists between two parties to bring the arm's length transfer pricing rules of Code §482 into play.