The degree of consistency in accounting practices between the controlled transaction and the uncontrolled comparables that materially affect the gross profit markup affects the reliability of the result. Thus, for example, if differences in inventory and other cost accounting practices would materially affect the gross profit markup, the ability to make reliable adjustments for such differences would affect the reliability of the results. Further, the controlled transaction and the comparable uncontrolled transaction should be consistent in the reporting of costs between cost of goods sold and operating expenses. The term cost of producing includes the cost of acquiring property that is held for resale.
§ 1.482-3(d)(3)(iii)(B) Consistency in accounting.
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By Internal Revenue Service
Category: US IRC Section 482 on Transfer Pricing, § 1.482-3 Methods to determine taxable income in connection with a transfer of tangible property | Tag: Accounting consistency, Cost plus method, Gross Margin, Gross profit margin, Gross profit markup
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