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Massachusetts
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Decision By Massachusetts Appellate Tax Board Related to Transfer Pricing
It is uncommon for transfer pricing cases to be raised at
the state level. However, states are searching harder for tax revenues to
make up for lost revenues resulting from closing/suffering businesses.
Transfer pricing could be a new line of attack that state revenue agencies
use to increase tax revenue. This particular case involved International
Data Group (“IDG”), which is a company headquartered in Massachusetts with
affiliates in other states. IDG charged its affiliates for concentrated
services such as accounting and marketing. The charges to its affiliates
were deemed to be not enough by the Massachusetts Department of Revenue.
However, this ruling by the Massachusetts Appellate Tax Board determined
that the prices IDG charged its out-of-state affiliates were at arms-length.
April 17, 2009
Add Back of Interest
or Intangible Expense
Corporate Exercise
Select
Supreme Judicial Court and search
for royalties to find court cases involving the deductibility of royalties paid to
related trademark holding companies.
Especially: The Sherwin-Williams Company v. Commissioner of Revenue,
Syms Corp. v. Commissioner of Revenue, and General Mills v Commissioner of
Revenue
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