Page 63 - Strategic Tax Planning for Global Commerce & Investment

Strategic Tax Planning for Global Commerce and Investment

comparable uncontrolled transaction in comparable
circumstances.

Comparable data can be obtained from two sources:

1. An entity seeking to use the CUP method
should prepare an analysis of prospected

uncontrolled transactions and adjust the da-
ta.
2. As an alternative, if no uncontrolled transac-
tion data is available internally, it may ob-
tain data from “public exchanges and
quotation media” in determining the uncon-
trolled transactions.

Direct Analysis of CUP Data

Many factors determine the comparability of transactions under
the CUP method, including, most important, the similarity of the
products. Product similarity can be ascertained in two ways:

1. Directly
2. Applying adjustments that account for dif-
ferences between the uncontrolled transac-

tions and the controlled transactions.

Even minor differences in contract terms or economic conditions
of the controlled transactions could materially affect the amount
charged in uncontrolled transactions.

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