Seminal Court Cases and Their Impact on Transfer Pricing ... - NABE
Seminal Court Cases and Their Impact on Transfer Pricing ... - NABE
Seminal Court Cases and Their Impact on Transfer Pricing ... - NABE
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Westreco (Tax <str<strong>on</strong>g>Court</str<strong>on</strong>g> 1992)<br />
Limited Returns for Limited Risk<br />
• USSub performed R&D services for FP,<br />
compensated <strong>on</strong> a cost-plus basis<br />
• IRS initially used “salary multiplier” method, <str<strong>on</strong>g>and</str<strong>on</strong>g> then<br />
financial data of “comparable” companies in same SIC<br />
code, to justify adjustment<br />
• <str<strong>on</strong>g>Court</str<strong>on</strong>g> rejects IRS positi<strong>on</strong> because data did not<br />
account for reduced risk undertaken by USSub, am<strong>on</strong>g<br />
other differences<br />
8
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