Reasons for an embarrassing result will have been forgotten. Worst of all, critical persons will have left the company, and it will be impossible to fill the gaps. Gathering the necessary documents in advance can preclude enormous trouble in the future. The January 1993 proposed and temporary regulations under IRC Sec. The process itself has become significant.
Documentation is what makes the arm's- length standard work.
It is now clear these tests can be satisfied, and large penalties avoided, by proper documentation and by reliance on professional tax advisors at the time prices are set. Here are 10 steps to take before the next audit. Before the beginning of a business cycle, meet with your outside advisors and agree on a game plan. If economists should be engaged to develop competitive data or an industry study, arrangements should be made at this time. The company's outside tax attorneys and accountants should advise how long they believe the process will take, how much it might cost, and whether a favorable agreement is likely.