482-iT(d)(2)(i)(A) recognizes that transactions by uncontrolled parties may produce a range of results, and that a controlled transaction will not be subject to a section 482 allocation if it falls within the range established by two or more comparables.
482-IT(d)(3)(v)(A)grants discretionary authority to the district director to consider information about uncontrolled comparables or the controlled taxpayer for one or more years before or after the year under review.
Step Two: Find the comparables whose profitability will be used to establish the CPI.
33) The "constructive operating income" of the tested party is computed by applying the profit-level indicators (PLIs) derived from the comparables to the tested party.
The standards for determining whether comparables are "exact" turn on "external" factors (that is with respect to the business and economic environment in which the comparable licenses take place) as well as "internal" standards (that is the terms of the contractual arrangements between the parties).
Inexact comparables are transactions involving similar although not identical intagibles.
The Report provides useful examples of how to screen comparables for the presence or absence of intangibles.
The Report does not indicate to what extent the predominance of "specific results" cases refers to these situations, but it does suggest that specific results were used "many times" in situations where a set of comparables could yield a range of results (presumably CPM cases).
These methods include the comparable uncontrolled price method, the resale method and the cost plus method.
482 regulations, a taxpayer may use the comparable profits method (CPM) or the profit split method; under the guidelines, a taxpayer may use the profit split method or the transactional net margin method (TNMM).
No transfer pricing adjustments are made if the requirements for the comparable intangible rule are met.
Five-year rule: No periodic adjustments will be made in any subsequent year if a taxpayer meets the requirements for the comparable intangible exception or the non-CUT exception for each year of the five-year period.