New developments in Mexican transfer pricing law

Article Abstract:

Mexico has revised its rules for valuing and reporting related party transactions based on the Organization for Economic Cooperation and Development Transfer Pricing Guidelines. The methodologies that taxpayers in Mexico engaged in such transactions have available to them include the resale price, comparable uncontrolled price, cost-plus, profit split and transactional net margin methods. Mexico's transfer pricing law changes identify the documentation required to support specific valuations and provide for penalty reduction when documentation is provided.

Standards, Mexico, Organization for Economic Cooperation and Development, Transfer pricing, Related party transactions

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Proposed regulations on sourcing of loss on sale of stock

Article Abstract:

The IRS released proposed regulations under IRC section 865(j) in July 1996 that identify how to source losses on the sale of stock in foreign affiliates. Loss treatment for certain types of stock, such as S corporation stock and stock in an RIC, will remain unchanged. In general, loss recognition should be allocated to the same class of income, based on residency, that would have resulted if the sale had yielded a gain. The regulations also provide de minimis and dividend-recapture exceptions, as well as anti-abuse provisions.

Corporate Tax Reduction, Laws, regulations and rules, International aspects, Corporate taxes, Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation), Loss deductions, Foreign source income taxation, Allocation (Taxation), Tax allocation

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Proposed regulations on classification of computer software transactions

Article Abstract:

Proposed IRS regulations under IRC section 861 have attempted to clarify the tax treatment of computer software transactions, but uncertainties still exist regarding international issues such as sourcing, foreign tax credits and foreign sales corporation treatment. The regulations classify transactions based on what is being transferred and whether the transfer should be characterized as a sale or a lease. A chart of the 16 examples listed in the regulations is provided.

Prepackaged software, Computer Software, Software Publishers, Computer software industry, Software industry, Software, Copyright, Copyrights, Copyright licenses, Copyright licensing

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