For your term project grade please respond to each question with 3-5 sentences. There are three article: but I am not able to post all article's.

1. Coca-Cola Owes $3.3 Billion in Taxes Over Foreig Transfer Licensing

Coca-Cola Co. on Friday said the Internal Revenue Service had notified it of a potential $3.3 billion federal income-tax liability, becoming the latest U.S. multinational challenged over so-called foreign transfer pricing. The Atlanta beverage giant also disclosed the IRS has recommended the matter be designated for litigation after a government audit determined the companys reported income from 2007 to 2009 should have been higher. The company firmly believes that the assessments are without merit and plans to pursue all administrative and judicial remedies necessary to resolve this matter, Coke said in a regulatory filing, adding it plans to file a petition in U.S. Tax Court challenging the notice. Coke said the dispute relates to how it reports income from foreign licensing of manufacturing, distribution, sale, marketing and promotion of products in overseas markets. Coke said it followed the methodology for the licenses outlined in a 1996 agreement with the IRS. The companys compliance with the agreement was confirmed by five audits covering the subsequent years through 2006, with the most recent audit ending in 2009, Coke added. An IRS spokesman declined to comment, citing a federal law prohibiting the IRS from discussing specific taxpayers Such disputes, in which the IRS accuses U.S. multinationals of transferring profits to countries with lower tax rates, have become increasingly common in recent years. The IRS is believed to have filed hundreds of such cases totaling tens of billions of dollars, particularly in the technology and pharmaceutical industries. Its almost more common than not to have a transfer pricing dispute with the U.S., said Robert Willens, an independent tax consultant in New York. The IRS dispute with Coke primarily revolves around how the company accounts for profit from its sales of concentrate used to make soda. Coke has several concentrate plants around the world and makes money from selling the concentrate to bottlers in local markets. Coke says it derived 57% of its $46 billion in revenue last year from outside the U.S., but it books a higher percentage of its operating income overseas. As a result, it reported an effective tax rate of 23.6% in 2014, below the statutory U.S. tax rate of 35%. Mr. Willens, the tax consultant, said such transfer pricing disputes typically are resolved out of court, typically for a fraction of the amount that the IRS is seeking. In its filing, Coke said its 1996 agreement with the IRS protects the company from penalties if the methodology is followed. The company didnt give details about the methodology. The company said it doesnt believe the dispute will have a material impact on its results and noted it regularly assesses its tax reserves for such situations. Top lawmakers and the White House have been discussing an ambitious overhaul of how the U.S. taxes its multinational firms.

2. Coca-Cola Improperly Shied Profits Abroad, Tax Court RulesWASHINGTON Coca-Cola Co. placed too much of its profit in its foreign operations instead of its higher-taxed domestic parent company, a U.S. Tax Court judge ruled Wednesday same successful rationale to subsequent tax years. Wednesdays ruling doesnt set a final amount that Coca-Cola will owe from 2007 to 2009. The company and the government must make further calculations to determine that. We are disappointed with the outcome of the U.S. Tax Court opinion, which we are reviewing in detail to consider its impact and potential grounds for its appeal, the company said in a statement Thursday. We intend to continue to vigorously defend our position. The IRS typically doesnt speak publicly about litigation. The dispute stemmed from Coca-Colas subsidiaries in countries including Brazil, Ireland and Egypt. Those operations produce syrups and other ingredients for use in the companys beverages. Especially before the 2017 U.S. tax law cut the corporate tax rate, U.S. companies had an incentive to pack profits into low-tax countries and defer U.S. taxes on those profits rather than attribute earnings to the U.S. parent, which faced an immediate 35% rate. Companies within a single corporate structure are supposed to allocate profits between the parent and a foreign subsidiary based on what unrelated companies would do in an equivalent arms length transaction. But there are plenty of gray areas, especially when companies profit from mobile, intangible assets like trademarks and patents. The IRS regularly engages in protracted legal fights with corporations over how those rules should apply in each situation. In his ruling, Judge Albert Lauber noted that Coca-Colas foreign subsidiaries had few trademarks or intellectual property and had little discretion over marketing, strategy and other decisions controlled by U.S. executives. Yet, he noted, some of them had profits far higher than the company as a whole, thanks to their arrangements with the parent company. He rejected the arguments advanced by the companys experts as unpersuasive.Coca-Cola had previously warned investors that the case could have a material adverse impact and has vowed to fight the IRS. The company had argued that the IRS had blessed its profit split during an earlier dispute. But Judge Lauber rejected that argument, calling it a formula to which the parties agreed in settling the dispute before them at that moment. The judge sided with Coca-Cola on one point about how its tax deficiency should be calculated.

Questions:

1. Who/what made the determination that Coca-Cola inappropriately located too much of its profits outside of the United States?

2. Based on the discussion in the article, summarize your understanding of the Coca-Cola operating structure.

3. Do you think the Coca-Cola subsidiary locations are solely driven by the level of taxation in their location? Explain.

4. What factors formed the basis for the ruling that Coca-Cola improperly shifted profits away from the U.S. to foreign locations with lower tax rates?

5. How should intercompany transactions be priced?

6. Does intercompany pricing impact overall operating results as shown in Coca-Colas consolidated financial statements? Explain your answer, specifically addressing Coca-Colas warning to investors that the results of this case could have a material adverse impact.

7. Explain your understanding of how pricing of intercompany sales determines profitability reported in separate legal entities that form a consolidated group.