Tag: Non-recognition of gain or loss

§ 1.482-1(f)(1)(iii)(B) Example.

/ Example, Non-recognition of gain or loss, Transfer pricing audit, Transfer pricing disputes, US IRC Section 482 on Transfer Pricing, § 1.482-1 Allocation of income and deductions among taxpayers
(i) In Year 1 USP, a United States corporation, bought 100 shares of UR, an unrelated corporation, for $100,000. In Year 2, when the value of the UR stock had decreased to $40,000, USP contributed all 100 shares of UR stock to its wholly-owned subsidiary in exchange for subsidiary’s capital stock. In Year 3, the subsidiary sold all of the UR stock for $40,000 to an unrelated buyer, and on its U.S. income tax return, claimed a loss of $60,000 attributable to the sale of the UR stock. USP and its subsidiary do not file a consolidated return. (ii) In determining the true taxable income of the subsidiary, the district director may disallow the loss of $60,000 on the ground that the loss was incurred by USP. National Securities Corp. v Commissioner, 137 F.2d 600 (3rd Cir. 1943), cert. denied, 320 U.S. 794 (1943) ... Read more

§ 1.482-1(f)(1)(iii)(B) Example.

/ Non-recognition of gain or loss, Transfer pricing audit, Transfer pricing disputes, US IRC Section 482 on Transfer Pricing, § 1.482-1 Allocation of income and deductions among taxpayers
The following example illustrates this paragraph (f)(1)(iii) ... Read more

§ 1.482-1(f)(1)(iii)(A) In general.

/ Non-recognition of gain or loss, Transfer pricing audit, Transfer pricing disputes, US IRC Section 482 on Transfer Pricing, § 1.482-1 Allocation of income and deductions among taxpayers
If necessary to prevent the avoidance of taxes or to clearly reflect income, the district director may make an allocation under section 482 with respect to transactions that otherwise qualify for nonrecognition of gain or loss under applicable provisions of the Internal Revenue Code (such as section 351 or 1031) ... Read more

§ 1.482-1(f)(1)(iii) Nonrecognition provisions may not bar allocation –

/ Non-recognition of gain or loss, Transfer pricing audit, Transfer pricing disputes, US IRC Section 482 on Transfer Pricing, § 1.482-1 Allocation of income and deductions among taxpayers
... Read more
Netherlands vs "X Beheer B.V", May 2008, (Hoge Raad) Dutch Supreme Court, Case no. 43849, VN 2008/23.14

Netherlands vs “X Beheer B.V”, May 2008, (Hoge Raad) Dutch Supreme Court, Case no. 43849, VN 2008/23.14

/ Arm's length principle, Commercial rationality, Commercially Irrational Transactions, Commercially Irrational Transactions, Decision in favor of tax authority, Depositary receipts, Disallowed deduction, Disregarding the transaction, Financial Transactions, Financial Transactions, Loan, Netherlands, Non-business loan, Non-Recognition and Recharacterisation, Non-Recognition and Recharacterisation, Non-recognition of gain or loss, Supreme Court, Write-off or write-down
“X Beheer B.V.” was founded in 1992 and has been part of the A-group as a holding company ever since. The shares of “X Beheer B.V.” were transferred against the issue of depositary receipts to a trust office foundation. The depository receipt holders of “X Beheer B.V.” were also holders of the depository receipts of shares of F B.V. (hereinafter: F), formerly the holding company of the A-group. In 1995, a reorganisation took place as a result of the wish of a number of depositary receipt holders to dispose of their interests in F and “X Beheer B.V.”. However, the remaining group of depositary receipt holders did not have the financial means to buy out those depositary receipt holders, after which it was decided to establish the (take-over) holding company G Holding B.V. (hereinafter: Holding). The intention was that G Holding B.V. would gradually buy up packages of depositary receipts from depositary receipt holders who wished to sell. After four ... Read more