At the consolidated level, accountants must eliminate the intercompany transaction
so that no profit or loss is recognized until it's realized through a transaction with an outside party.
In the recognition phase, any intercompany transaction
that could lead to an adjustment of income by the IRS or a foreign tax authority is considered to be an uncertain tax position.
To combat this perceived abuse in the past, many states (particularly separate return states where intercompany transactions
are not eliminated) enacted intercompany add-back provisions for specific types of transactions (usually involving intercompany interest or royalties).
This result is intended to prevent consolidated groups from using intercompany transactions
to dispose of assets without recognition of gain that would be taxable at the corporate level.
BlackLine addresses these issues by providing large multi-nationals a software clearinghouse solution for their intercompany transactions
In contrast to the single-entity approach taken under the consolidated intercompany transaction
In this era of globalization, the volume and complexity of intercompany transactions
have increased immeasurably," said BlackLine CEO Therese Tucker.
1502-13(d)(1)(i) explains that, for this purpose, the effect cannot be achieved to the extent a non-member reflects, directly or indirectly, any aspect of the intercompany transaction
The two most significant provisions at this stage in the process are the intercompany transaction
rules and the intercompany debt rules.
For example, long-standing intercompany transactions
may need to be replaced by new transactions, resulting in changes to intercompany agreements and operating and accounting procedures.
The anti-avoidance rules provide that if a transaction is engaged in or structured with a principal purpose of avoiding the intercompany transaction
rules, adjustments must be made to carry out the intercompany transaction
An intercompany transaction
is on between a parent and its subsidiary or between two subsidiaries of the same parent.