USA Law and Practice Contributed by: Kim Marie Boylan, Nicholas Wilkins, Christina Culver and Kiara Williams, White & Case LLP
3.3 Hierarchy of Methods There is no hierarchy of methods established in US transfer pricing regulations. Instead, the “best method” is to be used. However, the meth - od applied may differ depending on the type of transaction or the facts at issue (see 3.1 Transfer Pricing Methods ). 3.4 Ranges and Statistical Measures The USA does not have set ranges or statistical measures that are used in transfer pricing regu - lations. However, statistical measures are used in the arm’s length transactions. These statisti - cal measures are generally used to help assess the reliability of CUTs, calculate profit margins, and analyse financial data in the context of the transfer pricing methods. 3.5 Comparability Adjustments The IRS requires comparability adjustments to ensure transactions comply with the arm’s length standard under Section 482 of the Code. The Treasury Regulations require that these adjustments account for differences between related-party transactions and the comparables being used. If the differences are material and affect the pricing of the transaction, adjustments are necessary to improve comparability in the intercompany transaction.
available are dependent on the type of service or property involved in the transaction, as follows. • Transfer of tangible property – the specified transfer pricing methods are: (a) comparable uncontrolled price method; (b) resale price method; (c) cost plus method; (d) comparable profit split method; and (e) residual profit split method. • Transfer of intangible property – as detailed further in 4.1 Notable Rules , the specified transfer pricing methods are: (a) comparable uncontrolled transaction (CUT) method; (b) comparable profits method (CPM); and (c) profit split method. • Controlled services transactions – the speci - fied transfer pricing methods are: (a) comparable uncontrolled services price method; (b) gross services margin method; (c) services cost method (SCM); (d) CPM; and (e) profit split method. • Mixed property transactions – the specified transfer pricing methods are: (a) comparable profit split method; and (b) residual profit split method. • Cost-sharing platform contributions transac - tions – the specified transfer pricing methods are: (a) CUT method; (b) income method; (c) residual profit split method; (d) acquisition price method; and (e) market capitalisation method. 3.2 Unspecified Methods Taxpayers are allowed to use unspecified meth - ods if they are justifiable and appropriate.
4. Intangibles 4.1 Notable Rules
The USA regulates transfer pricing of intangibles under Treasury Regulation Section 1.482-4. As mentioned in 3.1 Transfer Pricing Methods , the following methods are used for transfer pricing
of intangibles: • CUT method; • CPM;
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