Tax treatment of services under transfer pricing rules.The Treasury Department and IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. have issued proposed regulations on the tax treatment of services transactions, including those related to intangible property intangible property n. items such as stock in a company which represent value but are not actual, tangible objects. , under the related party transfer pricing Transfer pricing refers to the pricing of goods and services within a multi-divisional organization, particularly in regard to cross-border transactions. For example, goods from the production division may be sold to the marketing division, or goods from a parent company may be rules. The current regulations regarding related party services transactions were issued in 1968, and are the only part of those regulations that were not addressed by updated regulations in 1994 and 1995. The proposed regulations provide guidance on the transfer pricing methods to be used to determine the arm's length price Arm's length price The price at which a willing buyer and a willing unrelated seller would freely agree to transact or a trade between related parties that is conducted as if they were unrelated, so that there is no conflict of interest in the transaction. in a services transaction. To download the proposed regs, visit www.ustreas.gov/press/releases/reports/ js706regs.pdf. Comments must be received by Dec. 9. |
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