Source: https://www.bna.com/section482-allocations-judicial-p7535/
Timestamp: 2018-12-15 11:57:07
Document Index: 407171575

Matched Legal Cases: ['§482', '§ 482', '§ 482', '§ 482', '§ 482', '§ 482', '§ 482', '§ 482', '§ 482', '§ 482', '§ 482', '§ 351', '§ 118', '§ 351', '§ 482', '§ 482', '§ 482']

Section 482 Allocations: Judicial Decisions and IRS Practice (Portfolio 553) | Bloomberg Tax
Tax Management Portfolio, Section 482 Allocations: Judicial Decisions and IRS Practice No. 553-2nd, examines judicial decisions and IRS practice involving the interpretation and application of §482 and the regulations thereunder to transactions between U.S. controlled taxpayers.
Brian D. Lepard is Law Alumni Professor of Law at the University of Nebraska College of Law, where he has taught the basic course on federal income taxation and courses on international aspects of U.S. income taxation, corporate tax, partnership tax, tax policy, and business planning. He is the author of Tax Management Portfolio No. 551, Section 482 Allocations: General Principles in the Code and Regulations, Tax Management Portfolio No. 552, Section 482 Allocations: Specific Allocation Methods and Rules in the Code and Regulations, and Tax Management Portfolio No. 553, Section 482 Allocations: Judicial Decisions and IRS Practice.
Professor Lepard has written additional scholarly works on transfer pricing, including a book chapter in his book, Customary International Law: A New Theory with Practical Applications, published in 2010 by Cambridge University Press. He is the principal co-author of BNA's Health Law & Business Portfolio No. 2000, Unrelated Business Income Tax Issues in Health Care (1996). Before becoming a professor of law he worked for six years as an associate at the Philadelphia law firm of Dechert Price & Rhoads, where he practiced tax law with an emphasis on the international aspects of U.S. income taxation and the taxation of exempt organizations.
Author's Note: I am grateful to Prof. Reuven Avi-Yonah of Michigan Law School for inviting me to take on this project and for his helpful advice, to Leonard Silverstein and Sally O'Connor for their patient encouragement and support, to my research assistants, Michael Suberly, Paul Butler, and Richard Weber, for their invaluable assistance in the research and preparation of the portfolio, and to my secretaries, Darlene Svancara, Vicki Lill, Marcy Tintera, Bambi King, and Ann Chalupa, without whose help the manuscript could not have been completed. I also appreciate the support of Deans Steven Willborn and Susan Poser of the University of Nebraska College of Law and the financial support for the research of the portfolio provided by the Ross McCollum Fund.
B. The Function of Section 482 and a Brief History
2. Congressâ€™ Purpose in Enacting § 482
E. IRS Practice in Pursuing Domestic § 482 Cases
F. Organization of the Portfolio
G. A Suggested Approach to § 482
II. Some Problems of Interpretation under the Statute Addressed in Judicial Decisions and IRS Practice
B. The Relationship of § 482 to Other Code Provisions
3. Judicial Decisions and IRS Practice
C. Definitions of â€œOrganizations, Trades or Businessesâ€
1. The Statutory Purpose of the Language: A Codification of General Tax Avoidance Principles for all Taxpayers or a Focus on Income Shifting Among Businesses Only?
2. Definition of â€œOrganizationâ€
3. Exempt Organizations
4. Corporations Filing a Consolidated Return
5. A Flexible Interpretation of â€œTrade or Businessâ€
6. Investment Activities as a â€œTrade or Businessâ€
7. Leasing Activities as a â€œTrade or Businessâ€
8. Permissibility of Allocations Among Different Trades or Businesses Conducted by a Single Legal Entity
9. The Trade or Business of Being an Employee
10. Judicial Decisions and IRS Practice Involving Personal Service Corporations
a. Sole Proprietorship Cases
b. Employee Cases Not Involving a Sole Proprietorship
11. Judicial Decisions and IRS Practice Involving Entities Other Than Personal Service Corporations
D. Definition of â€œOwned or Controlled Directly or Indirectly by the Same Interestsâ€
2. Definition of â€œControlâ€
b. Judicial Decisions and IRS Practice on the Definition of â€œControlâ€
(1) Actual or Effective Control
(2) Time When Common Control Must Exist
(3) Presumption of Control
(4) Control of Trusts and Estates
(5) Parent-Subsidiary Entities
(6) Brother-Sister Entities
(7) Ownership of a Corporation by Two 50% Shareholders
(8) Common Design
3. Judicial Decisions and IRS Practice Relating to the Definition of â€œOwnershipâ€
E. The Meaning of â€œAllocationâ€
1. Judicial Decisions and IRS Practice Relating to the Creation of Income Doctrine and the Commissioner's Authority to Impute Unrealized Income
2. Allocation of Deductions as Well as Income
b. Cases Involving the â€œProhibited Disallowanceâ€ Doctrine
c. Cases Involving Formulary Apportionment of Deductions
d. Other Cases Involving Allocation of Deductions
e. Allocation of Investment Tax Credits
F. Tax Evasion Not a Prerequisite to an Allocation
G. Common Control by Itself Does Not Warrant an Allocation
H. Section 482 Applies Only at the Discretion of the Commissioner and Not at the Request of the Taxpayer; However, Taxpayers May Initiate Adjustments to Accord with the Arm's-Length Standard
I. The Constitutionality of § 482
III. Judicial Decisions and IRS Practice Interpreting the Arm's-Length Standard in the Regulations
B. Interpretation of the General Arm's-Length Standard
C. Some Specific Problems Relating to Interpretation of the Arm's-Length Standard in the Regulations
1. The Meaning of â€œUncontrolled Taxpayersâ€: Does â€œUncontrolledâ€ Mean â€œUnrelatedâ€ or Could It Also Encompass â€œRelated But Uncontrolled Taxpayersâ€ or Even â€œControlled Taxpayersâ€?
2. Role of the Actual Transaction Undertaken
3. A Focus on Results, Not Methods
4. No Allocation of Assets
5. Compulsory Consolidation No Longer Prohibited
6. The â€œBest Method Ruleâ€ in the 1994 Regulations
7. Code Recharacterization of Transactions
a. Market Share Strategy
b. Different Geographic Markets
c. Location Savings
9. The Arm's-Length Range and the Standard of Review
10. Consideration of Multiple Year Data
IV. Judicial Decisions and IRS Practice Involving the Relationship Between Section 482 and Traditional Judicial Anti-Tax Avoidance Doctrines
B. Judicial Decisions and IRS Practice
1. Involving the Sham Entity Doctrine
b. Surtax Exemption Cases
2. Involving an Agency Relationship
3. Involving the Sham Transaction Doctrine
4. Involving the Substance over Form Doctrine
5. Involving the Business Purpose Doctrine
6. Involving the True Earner Principle
7. Involving the True Earner Principle and the Completed Contract Method of Accounting
8. Involving the Assignment of Income from Property Doctrine
9. Involving the Step Transaction Doctrine
V. Judicial Decisions and IRS Practice Addressing the Burden of Proof in § 482 Cases
A. Judicial Decisions and IRS Practice under Pre-1998 Law
2. Cases Involving No Shifting of the Burden of Proof
3. Cases Involving the Shifting of the Burden of Proof to the IRS
4. Cases Where the Court Did Not Shift the Burden Because it Found Fair Warning
5. Cases Holding § 482 Not to Apply at All Where No Fair Warning
6. Cases Finding No Shifting of Burden Even Where IRS Did Not Rely on § 482
7. Section 482 May Be Invoked Only by the Treasury Department and Not by the Department of Justice
B. Judicial Decisions and IRS Practice under the 1998 Act
VI. Judicial Decisions and IRS Practice Involving Transfers of Tangible Property
B. The Comparable Uncontrolled Price (â€œCUPâ€) Method
2. Judicial Decisions and IRS Practice Involving the CUP Method in the Regulations
2. Judicial Decisions and IRS Practice Involving the Resale Price Method
2. Judicial Decisions and IRS Practice Involving the Cost Plus Method
1. In the Regulations
2. In Judicial Decisions and IRS Practice
VII. Judicial Decisions and IRS Practice Involving the Use of Tangible Property
A. The General Arm's-Length Standard
1. Excessive Rental Charges
2. Insufficient Rental Charges
3. Nonpayment of Rents Due Under a Lease Agreement
4. Arm's-Length Rent Equals Zero
5. No Income Realized from Assumption of a Lease with Excessive Rents
C. Deemed Arm's-Length Rental Charge for Subleases
VIII. Judicial Decisions and IRS Practice Involving the Performance of Services
2. Relationship Between the General Arm's-Length Standard in the Regulations and the True Earner Principle
a. Involving Personal Service Corporations
b. Other Cases Involving Domestic Transactions
c. IRS Practice Involving an Arm's-Length Charge for Services
B. The Safe Harbor Deemed Arm's-Length Charge
2. Judicial Decisions and IRS Practice
C. The General Arm's-Length Standard Applicable to Services That Are an â€œIntegral Partâ€ of the Taxpayer's Business
D. Services Rendered in Connection with the Transfer of Property
IX. Judicial Decisions and IRS Practice Involving Loans or Advances
B. The General Arm's-Length Standard
1. Judicial Decisions and IRS Practice Involving the Issue of Bona Fide Indebtedness
2. Judicial Decisions and IRS Practice Involving a General Arm's-Length Interest Rate
C. The Financially Troubled Debtor
D. Safe Haven Interest Rates
E. The Situs Rule
F. Intercompany Trade Receivables
G. Personal Holding Company Income
X. Judicial Decisions and IRS Practice Involving the Transfer of Intangibles
B. General Principles in the Regulations
C. Judicial Decisions and IRS Practice Involving the Transfer of Intangibles
1. Applying the Commensurate with Income Standard
2. Applying Specified Methods in the Regulations
3. Applying Unspecified Methods
a. Bonds or Notes
e. Licenses or Contract Rights
f. Trade Names, Good Will, Franchise Agreements, and Similar Intangibles
XI. Judicial Decisions and IRS Practice Involving the Comparable Profits Method
XII. Judicial Decisions and IRS Practice Applying Profit Split Methods
A. General Principles in the Regulations
B. Judicial Decisions Applying Profit Split Methods
C. IRS Practice Applying Profit Split Methods
XIII. Judicial Decisions and IRS Practice Involving Collateral Adjustments
B. Overview of Regulatory Provisions Relating to Correlative Allocations
C. Overview of Regulatory Provisions Relating to Conforming or Secondary Adjustments
1. Definition and Function of Conforming Adjustments
2. Rev. Proc. 99-32 and Rev. Proc. 65-17 Relief
D. Judicial Decisions and IRS Practice Involving Correlative Allocations and Conforming Adjustments
2. Conforming Adjustments
a. Conforming Adjustments Involving Brother-Sister Corporations
(1) Constructive Distribution Followed by Capital Contribution
(2) Direct transfer
b. Conforming Adjustments Involving Parent-Subsidiary Corporations
E. Other Collateral Effects
XIV. Judicial Decisions and IRS Practice Involving Setoffs
XV. Judicial Decisions and IRS Practice Involving the Effect of Legal Restrictions
C. Judicial Decisions and IRS Practice
XVI. Judicial Decisions and IRS Practice Involving the Relationship Between § 482 and Nonrecognition Transactions
C. Critique of the Provisions of the Regulations
D. Judicial Decisions and IRS Practice
1. Involving the Relationship Between § 482 and § 351 or § 118
a. Involving Allocation of Income or Losses from the Corporation to the Shareholder
(1) Cases and Rulings in Which an Allocation Was Upheld
(2) Cases or Rulings in Which an Allocation Was Not Upheld or Made
b. Involving § 351 and the Separation of Expenses from Related Income
2. Involving the Relationship Between § 482 and Other Code Sections
a. Section 311
b. Sections 336 and 337
c. Sections 354, 356, and 361
d. Section 1031
e. Section 108
f. Section 704
g. Section 721
h. Sections 731 and 732
i. Sections 1501 et seq.
j. Subchapter T Cooperatives
XVII. Judicial Decisions and IRS Practice Involving Cost Sharing Arrangements
B. Judicial Decisions Involving Cost Sharing Arrangements
C. IRS Practice Involving Cost Sharing Arrangements
XVIII. Judicial Decisions and IRS Practice Involving Penalties
A. Overview of the Code and Regulations
B. Judicial Decisions Involving Penalties
C. IRS Practice Involving Penalties
Worksheet 1 Preamble to the 1994 § 482 Regulations
Worksheet 2 Preamble to the 1995 § 482 Cost Sharing Regulations
Worksheet 3 The 1935 Regulations