Blog

The EdgarStat Blog explores issues in transfer pricing and application of the transactional net margin method (TNMM or CPM in the US) and other enterprise profit-based methods.

Intercompany Royalties: Does the Realistic Alternatives Principle Endorse CPM?
September 27, 2022 by Harold McClure

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

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Medtronic Litigation: Unspecified Methods vs. Traditional Methods
September 02, 2022 by Harold McClure

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

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