Since the 1950s, companies have seen the advantage of operating in various countries as multinational corporations (MNCs), and today, almost all large companies are considered to be an MNC. Once again, the MNC is under scrutiny by authorities for trying to avoid income taxes and for keeping money offshore.

This information technology company is an MNC that claims to do business in over 100 countries, and management has concerns that the company might run afoul of the treasury regulations in computing income between subsidiaries that require your input. For this assignment, you will prepare a report to management:

Utilizing the five steps for conducting tax research, complete the following:

Give an overview of the history of Internal Revenue Service (IRS) regulations concerning the allocation of income and deductions. Be sure to pay particular attention to the MNC.

Prepare a report on at least 2 companies that have been accused of illegal price transfer or allocation of income.

Provide guidance to management on how to avoid issues with the IRS in conducting business with overseas subsidiaries.

Answer rating: 100% (QA)

Solution Explanation of Provisions I Allocation and Apportionment of Deductions and the Calculation of Taxable Income for Purposes of Section 904a A Stewardship Expenses Litigation Damages Awards and ... View the full answer