The U.S. Tax Court has issued an opinion concluding that the IRS Commissioner—in exercising authority under Code section 482 and adjusting the reported prices for items transferred among taxpayers and their foreign affiliates—is not required to determine the “true separate taxable income” of each controlled taxpayer in a consolidated group contemporaneously with making the transfer pricing adjustments.
The Tax Court also concluded that the IRS Commissioner may aggregate one or more related transactions instead of making specific adjustments for each type of transaction. The Tax Court found that section 482 and the regulations allow the IRS Commissioner to aggregate one or more related transactions concerning an intangible, a purchase and sale of tangible property, or a provision of services—instead of making specific adjustments with respect to each type of transaction.
