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Can the Arm’s Length Standard Beat the R.A.P.? Transfer Pricing After the T.C.J.A.

Volume 5 No 3    |    Read Article

By Michael Peggs and Sheryl Shah

Experienced tax litigators know that Congress often protects the I.R.S. when an important case is lost. Yes, the taxpayer wins. But Congress codifies the I.R.S. position by an amendment to the law. The T.C.J.A. revised Code §482 legislatively, thereby reversing Tax Court decisions in the Amazon and Veritas cases that dismissed two arguments raised by the I.R.S. in transfer pricing litigation – mandatory use of aggregate basis of valuation (grouping of intangibles for valuation purposes) and the realistic alternative principle (challenging the business judgment for the transaction). Michael Peggs and Sheryl Shah explain this attack on the arm’s length principle of taxation.    See more →