Planning alternatives to the earnings stripping provisions of section 163(j)

Article Abstract:

Proposed IRS regulations under IRC section 163(j) have limited the deductibility of interest from corporations that is paid to related persons who are exempt from US taxation on that interest. The 'earnings stripping provision' works to the disadvantage of foreign-owned US companies who are financed by the parent company. However, deductibility limits apply only to interest in excess of 50% of the adjustable taxable income for that year and so planning methods to increase adjustable taxable income without increasing total taxable income are provided to avoid section 163(j) limitations.

Analysis, Tax deductions, Interest, Interest (Finance)

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Temporary transfer pricing regs. adopt best method rule

Article Abstract:

The temporary regulations under IRC section 482 issued on Jan 13, 1993, reaffirm the arm's length standard and adopt a 'best method' rule for pricing intercompany transfers of tangible and intangible goods. The rule is a more flexible approach to the arm's length standard which allows companies to choose the most accurate measure to comply with the standard based on the facts and circumstances. The temporary regulations also include usage of profit split methods and transfer pricing misstatement penalties.

Laws, regulations and rules, Transfer pricing

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Proposed section 482 Regs. adopt comparable profit interval requirement

Article Abstract:

IRS proposed regulations for Section 482, issued on Jan 24, 1992, adopt a comparable profit interval for the pricing, cost and resale price of tangible and intangible property and include rules for cost-sharing agreements. The regulations allow the IRS to adopt a comparable operating income for foreign-owned US corporations in comparison to domestic-owned US corporations when profits are under-reported due to transfer pricing.

Real estate, Real property, Intangible property, Intangible assets

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