The IRS has recently asserted implicit support in several situations where a foreign based affiliate extended an intercompany loan to a US borrowing affiliate. In this piece, we'll discuss an intercompany loan involving Perrigo, and compare the IRS settlement to the litigation involving GE Capital Canada before we turn to another potential IRS issue.

Topics: US Internal Revenue Service Intercompany Guarantee Fees Intercompany Loans Intercompany Financing US Transfer Pricing Canada Revenue Agency

Microeconomics are detached from the reality of corporate profits behavior. Here, I explore the operating profits (before depreciation and amortization) of a major group of U.S. corporations (consolidated entities) that make up a large fraction of U.S. gross domestic product.

Topics: Profit Indicators Corporate Profits Oligopoly US Transfer Pricing

Data suggest that “big oil” forms an oligopoly industry. Noise about oil and gas prices being determined by supply and demand is suspect.

Topics: Oil and Gas Transfer Pricing Profit Indicators US Transfer Pricing

Licensees bear significant commercial risk when they use valuable intangible assets owned by another entity. As such, any method that affords them with an expected return to its tangible assets that is only as high as the overall enterprise’s cost of capital is inconsistent with sound economics.

Topics: Intangibles Medtronic Royalty Rates Tax Controversy Section 482 TNMM/CPM US Transfer Pricing

This discussion presents a simplified illustration of the issues with respect to the unspecified method applied in Medtronic III in contrast to the IRS' extreme CPM approach and a traditional RPSM approach based on sound financial economics.

Topics: Residual Profit Split Method Unspecified Method Intangibles Tax Policy Medtronic Tax Controversy Section 482 US Internal Revenue Service TNMM/CPM US Transfer Pricing