Question

In: Advanced Math

U.S. Treasury Regulations require the use of one of five specified methods to determine the arm’s-length price in a sale of

U.S. Treasury Regulations require the use of one of five specified methods to determine the arm’s-length price in a sale of tangible property. Which of the following is not one of those methods?
a. Cost-plus method.
b. Market-based method.
c. Profit split method.
d. Resale price method.

Solutions

Expert Solution

a.

Cost plus method is one the five methods which is mentioned by U.S. treasury regulations to determine the transfer price. 

This option is incorrect.

 

c.

Profit split method is included in the methods of calculating transfer pricing as per the U.S. regulations. 

This option is incorrect.

 

d.

Resale price method is also included in the methods provide by U.S. treasury regulations to calculate the transfer price.

This option is incorrect.

 

b.

Market based method is used to attain the objective of performance evaluation. This is not includes the five methods provided by the U.S. treasury regulations. Hence this method is not used for determine the arm’s length price of the sale of tangible property.

This option is correct.

Nabeel answered 1 year ago
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