USAco, a domestic corporation, is a wholly-owned subsidiary of FORco, a foreign
ID: 2590921 • Letter: U
Question
USAco, a domestic corporation, is a wholly-owned subsidiary of FORco, a foreign corporation. USAco purchases chemical supplies from FORco, and also pays FORco a royalty for the use of FORco's propriety pharmaceuticals. The only method USAco could use to determine the arm's length price for both of these related party transactions is:
the comparable profits method.
the cost plus method.
the resale price method.
the comparable uncontrolled price method.
the comparable profits method.
the cost plus method.
the resale price method.
the comparable uncontrolled price method.
Explanation / Answer
Answer is:
the comparable uncontrolled price method.
The comparable uncontrolled price method compares the price charged for property or services transferred in a controlled transaction to the price charged for property or services transferred in a comparable uncontrolled transaction in comparablecircumstances.
the comparable uncontrolled price method.
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