USA Trends and Developments Contributed by: Sean Lyons, Nicholas Wilkins, Kevin Spencer and Kim Marie Boylan, White & Case LLP
administrative appeals procedures, fast-track settlement, mediation, and the mutual assistance procedures for treaty-based disputes. Under her leadership, the practice and group members have received numerous awards and prestigious rankings.
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Transfer Pricing Regulations Under a (Loper) Bright Light In 2024, the US Supreme Court changed the paradigm for judicial review of federal agencies’ pronounce - ments. Given that the majority of US transfer pric - ing guidance takes the form of Treasury Regulations, commentators expected this decision to have far- reaching implications for the future of the US transfer pricing regime. This article examines the first wave of transfer pricing cases under the new standard, and considers the impact on the transfer pricing regime more broadly. In the USA, transfer pricing rules are governed by Sec - tion 482 of the Internal Revenue Code (the “Code”). Section 482 grants the US Internal Revenue Service (IRS) broad discretion to allocate income, deductions, credits and allowances among related persons “to prevent the evasion of taxes or clearly to reflect the income” of such persons. Section 482 also mandates that the income with regard to the transfer or licensing of an intangible be commensurate with the income attributable to that intangible, and provides high-level standards for valuing such transfers. Despite its central importance to the US transfer pric - ing regime, Section 482 is only three sentences long and provides no technical guidance, including on key
questions such as comparability, selection of transfer pricing methods and similar fundamental topics. In its entirety, Section 482 reads as follows. “In any case of two or more organizations, trades, or businesses (whether or not incorporated, whether or not organized in the United States, and whether or not affiliated) owned or controlled directly or indirectly by the same interests, the Secretary may distribute, apportion, or allocate gross income, deductions, cred - its, or allowances between or among such organiza - tions, trades, or businesses, if he determines that such distribution, apportionment, or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such organizations, trades, or businesses. In the case of any transfer (or license) of intangible property (within the meaning of [S]ection 367 (d)(4) [of the Code]), the income with respect to such transfer or license shall be commensurate with the income attributable to the intangible. For pur - poses of this section, the Secretary shall require the valuation of transfers of intangible property (including intangible property transferred with other property or services) on an aggregate basis or the valuation of such a transfer on the basis of the realistic alternatives to such a transfer, if the Secretary determines that such basis is the most reliable means of valuation of such transfers.”
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