Source: https://www.federalregister.gov/documents/2006/12/22/E6-21908/treatment-of-services-under-section-482-allocation-of-income-and-deductions-from-intangibles
Timestamp: 2017-08-23 08:19:22
Document Index: 673824935

Matched Legal Cases: ['§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091', '§\u20091']

Federal Register :: Treatment of Services Under Section 482; Allocation of Income and Deductions From Intangibles; Stewardship Expense; Correction
A Rule by the Internal Revenue Service on 12/22/2006
71 FR 76902
76902-76904 (3 pages)
TD 9278
E6-21908
https://www.federalregister.gov/d/E6-21908 https://www.federalregister.gov/d/E6-21908
Effective Date: The amendments are effective on January 1, 2007.
The final and temporary regulations that are the subject of these corrections are under sections 482 and 861 of the Internal Revenue Code.
As published, the final and temporary regulations (TD 9278) contains errors that may prove to be misleading and are in need of clarification.
Start List of Subjects Start Printed Page 76903
(i) [Reserved]. For further guidance, see § 1.482-1T(i) introductory text.
1. Paragraphs (i)(1) through (i)(10) are added and reserved.
2. Paragraphs (j)(1) through (j)(5) are amended by adding “§ ” before the language “1.482-1(j)(1)”.
§ 1. 482-1T
Allocation of income and deductions among taxpayers (temporary).
(i)(1) through (i)(10) [Reserved]. For further guidance, see § 1.482-1(i)(1) through (i)(10).
§ 1.482-8T
Example of the best method rule (temporary).
(iv) * * * USP contributed the long-term endorsement contracts with professional athletes. * * *
1. Paragraph (b)(6),
2. Paragraph (g)(2),
3. Paragraph (i)(2) is revised.
4. Paragraph (i)(5),
5. Paragraph (i)(5),
6. Paragraph (l)(5),
7. Paragraph (m)(5),
§ 1.482-9T
Methods to determine taxable income in connection with a controlled services transaction (temporary).
(vi) In contrast, if aggregated services AB were allocated by reference to the total U.S. dollar value of sales to uncontrolled parties (trade sales) by each company, the following results would obtain:
(iv) * * * In the bid on the Country 2 contract for Level 1 waste remediation, Company B proposes to use a multidisciplinary team of specialists from Company A and Company B. * * *
(2) * * * For purposes of this paragraph (i), an arrangement will be treated as a contingent-payment arrangement if it meets all of the requirements in paragraph (i)(2)(i) of this section and is consistent with the economic substance and conduct requirement in paragraph (i)(2)(ii) of this section.
(iii) The years under examination are years 6 through 9. * * *
(ii) The years under examination are years 6 through 9. * * *
(i) * * * Y, a Country B corporation, is a distribution and marketing company that also performs clinical trials for X in Country B. * * *
(ii) * * * The comparable profits method may provide the most reliable measure of an arm's length result if uncontrolled parties are identified that perform similar, combined functions of maintaining and providing spare parts for similar equipment. * * *
1. Paragraph (b)(3) is revised.
2. Paragraph (g), paragraph (i) following
3. Paragraph (h)(1), first three sentences are revised.
4. Paragraph (h)(3) is revised.
(3) Supportive functions. Deductions which are supportive in nature (such as overhead, general and administrative, and supervisory expenses) may relate to other deductions which can more readily be allocated to gross income. In such instance, such supportive deductions may be allocated and apportioned along with the deductions to which they relate. On the other hand, it would be equally acceptable to attribute supportive deductions on some reasonable basis directly to activities or property which generate, have generated or could reasonably be expected to generate gross income. This would ordinarily be accomplished by allocating the supportive expenses to all gross income or to another broad class of gross income and apportioning the expenses in accordance with paragraph (c)(1) of this section. For this purpose, reasonable departmental overhead rates may be utilized. For examples of the application of the principles of this paragraph (b)(3) to expenses other than expenses attributable to stewardship activities, see Examples 19 through 21 of paragraph (g) of this section. See paragraph (e)(4)(ii) of this section for the allocation and apportionment of deductions attributable to stewardship expenses. However, supportive deductions that are described in § 1.861-14T(e)(3) shall be allocated and apportioned in accordance with the rules of § 1.861-14T and shall not be allocated and apportioned by reference only to the gross income of a single member of an affiliated group of corporations as defined in § 1.861-14T(d).
(h) * * * (1) * * * In general, the rules of this section, as well as the rules of §§ 1.861-9T, 1.861-10T, 1.861-11T, 1.861-12T, and 1.861-14T apply for taxable years beginning after December 31, 1986, except for paragraphs (a)(5)(ii), (b)(3), (e)(4), (f)(4)(i), and paragraph (g) Example 17, Example 18, and Example 30 of this section, which are generally applicable for taxable years beginning after December 31, 2006. Also, see §§ 1.861-8(e)(12)(iv) and 1.861-14(e)(6) Start Printed Page 76904for rules concerning the allocation and apportionment of deductions for charitable contributions. In the case of corporate taxpayers, transition rules set forth in § 1.861-13T provide for the gradual phase-in of certain provisions of this and the foregoing sections. * * *
(3) Expiration date. The applicability of the paragraphs (a)(5)(ii), (b)(3), (e)(4), (f)(4)(i), and paragraph (g) Example 17, Example 18, and Example 30 of this section, expires on or before July 31, 2009.
§ 1.6662-6T
Transactions between parties described in section 482 and net section 482 transfer price adjustments (temporary).
(d)(2)(ii)(B) A taxpayer's selection of the services cost method for certain services, described in § 1.482-9T(b), and its application of that method to a controlled services transaction will be considered reasonable for purposes of the specified method requirement only if the taxpayer reasonably allocated and apportioned costs in accordance with § 1.482-9T(k), reasonably concluded that the controlled services transaction meets the conditions of § 1.482-9T(b)(3), and reasonably concluded that the controlled services transaction is not described in § 1.482-9T(b)(2). * * *
[FR Doc. E6-21908 Filed 12-21-06; 8:45 am]