Chapter 17 - Chapter 17 International Procedure 1. Answer:...

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Chapter 17 International Procedure 1. Answer: Given the past lack of success in securing the information it is unlikely that simply requesting the information again will yield any results. Instead, it is recommended that a memorandum be prepared for the parent company which discusses the information requested as well as the specific penalties which may apply for noncompliance. If possible, a range of the potential penalties should be estimated. It should be stressed to foreign management that the IRS has the authority to determine appropriate transfer prices based on information available to them if the taxpayer does not furnish the required information. Accordingly, the commercial reasons for not disclosing the information must be weighed against the potential tax and penalties on any adjustments. 2. Answer: The principal advantage of seeking competent authority adverse is the relief from double taxation. Assuming the competent authorities can come to a mutually acceptable solution, a correlative adjustment will be allowed. Other factors which should be considered include the impact of foreign currency fluctuations, whether interest income (expense) will be payable on the refund (deficiency), the impact of the issue on future year’s examinations, as well as the statute of limitations for any refund
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This note was uploaded on 09/08/2011 for the course ECON 3301 taught by Professor Clavin during the Spring '10 term at Hartford.

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Chapter 17 - Chapter 17 International Procedure 1. Answer:...

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