IRS issued Treasury Decision 9738 on 14 September 2015 containing temporary regulations under Section 482 clarifying the application of the arm’s-length standard when multiple code sections.
The temporary regulations apply to tax years ending on or after 14 September 2015. It revises Reg. Section 1.482-1(f)(2)(i) and (ii)(B) are set forth in Reg. Section 1.482-1T(f)(2)(i)(A)-(E) and (j)(7). Consistent with the existing regulations, the temporary regulations assert that the arm’s-length standard of Section 482 applies to all controlled transactions. As such, the arm’s-length amount must be consistent with the value transferred between the parties without regard to the form or character of the transaction. A coordinated best method analysis and evaluation of the transaction or transactions may be necessary and such analysis would include a consistent consideration of the facts and circumstances of the functions performed, resources employed, and risks assumed in the relevant transactions, in order to achieve a consistent measure of arm’s-length results.
