Internal Revenue Code:Sec. 482. Allocation of income and deductions among taxpayers

From TaxAlmanac

Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter E - Accounting Periods and Methods of Accounting
         PART III - ADJUSTMENTS
       

Statute

    Sec. 482. Allocation of income and deductions among taxpayers
 
      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,
    credits, or allowances between or among such organizations, 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 section
    936(h)(3)(B)), the income with respect to such transfer or license
    shall be commensurate with the income attributable to the
    intangible.
 

Sources

    (Aug. 16, 1954, ch. 736, 68A Stat. 162; Pub. L. 94-455, title XIX,
    Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 99-514,
    title XII, Sec. 1231(e)(1), Oct. 22, 1986, 100 Stat. 2562.)
 

Miscellaneous

                                 AMENDMENTS
      2004 - Subsec.806,Pub.L.108-357, NOTE:deadlines.Reports.>>
    Studies.
    (a) Transfer Pricing Rules.--The Secretary of the Treasury or the 
Secretary's delegate shall conduct a study regarding the effectiveness 
of current transfer pricing rules and compliance efforts in ensuring 
that cross-border transfers and other related-party transactions, 
particularly transactions involving intangible assets, service 
contracts, or leases cannot be used improperly to shift income out of 
the United States. The study shall include a review of the 
contemporaneous documentation and penalty rules under section 6662 of 
the Internal Revenue Code of 1986, a review of the regulatory and 
administrative guidance implementing the principles of section 482 of 
such Code to transactions involving intangible property and services and 
to cost-sharing arrangements, and an examination of whether increased 
disclosure of cross-border transactions should be required. The study 
shall set forth specific
recommendations to address all abuses identified in the study. Not later 
than June 30, 2005, such Secretary or delegate shall submit to the 
Congress a report of such study.
    (b) Income Tax Treaties.--The Secretary of the Treasury or the 
Secretary's delegate shall conduct a study of United States income tax 
treaties to identify any inappropriate reductions in United States 
withholding tax that provide opportunities for shifting income out of 
the United States, and to evaluate whether existing anti-abuse 
mechanisms are operating properly. The study shall include specific 
recommendations to address all inappropriate uses of tax treaties. Not 
later than June 30, 2005, such Secretary or delegate shall submit to the 
Congress a report of such study.
    (c) Effectiveness of Corporate Expatriation Provisions.--The 
Secretary of the Treasury or the Secretary's delegate shall conduct a 
study of the effectiveness of the provisions of this title on corporate 
expatriation. The study shall include such recommendations as such 
Secretary or delegate may have to improve the effectiveness of such 
provisions in carrying out the purposes of this title. Not later than 
December 31, 2006, such Secretary or delegate shall submit to the 
Congress a report of such study.


      1986 - Pub. L. 99-514 inserted at end ''In the case of any
    transfer (or license) of intangible property (within the meaning of
    section 936(h)(3)(B)), the income with respect to such transfer or
    license shall be commensurate with the income attributable to the
    intangible.''
      1976 - Pub. L. 94-455 struck out ''or his delegate'' after
    ''Secretary''.
                      EFFECTIVE DATE OF 1986 AMENDMENT
      Amendment by Pub. L. 99-514 applicable to taxable years beginning
    after Dec. 31, 1986, but only with respect to transfers after Nov.
    16, 1985, or licenses granted after such date, or before such date
    with respect to property not in existence or owned by the taxpayer
    on such date, except that for purposes of section 936(h)(5)(C) of
    this title, such amendment applicable to taxable years beginning
    after Dec. 31, 1986, without regard to when the transfer or license
    was made, see section 1231(g)(2) of Pub. L. 99-514, set out as a
    note under section 936 of this title.
                                REGULATIONS
      For requirement that, not later than 180 days after July 18,
    1984, the Secretary of the Treasury modify the safe harbor interest
    rates applicable under the regulations prescribed under this
    section so that such rates are consistent with the rates applicable
    under section 483 of this title by reason of the amendments made by
    Pub. L. 98-369, see section 44(b)(2) of Pub. L. 98-369, set out as
    an Effective Date note under section 1271 of this title.
          STUDY OF APPLICATION AND ADMINISTRATION OF THIS SECTION
      Pub. L. 101-508, title XI, Sec. 11316, Nov. 5, 1990, 104 Stat.
    1388-458, directed Secretary of the Treasury or his delegate to
    conduct a study of the application and administration of section
    482 of the Internal Revenue Code of 1986 and not later than Mar. 1,
    1992, submit to Committee on Ways and Means of House of
    Representatives and Committee on Finance of Senate a report on the
    study, together with such recommendations as he deemed advisable.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 845, 857, 901, 936, 941,
    994, 1059A, 1505, 6038A, 6038B, 6662 of this title; title 17
    section 1001.