Using the Comparable Profits Method of Transfer Pricing, the Transfer

question 51

Multiple Choice

Using the comparable profits method of transfer pricing, the transfer price is determined by:

• A) referring to an objective measure of profitability earned by uncontrolled taxpayers on comparable, uncontrolled sales.
• B) adding a standard profit margin to the operating expenses of the buying division.
• C) dividing a reasonable amount of profit between the selling and buying divisions.
• D) comparing the normal profits of the selling and buying divisions and basing the price on the highest margin.

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Definitions:

Malicious Prosecution

A legal claim made against someone for wrongfully initiating criminal or civil proceedings without proper grounds.

Nuisance Action

A lawsuit filed to stop or rectify a harm that arises from the improper use of land, which interferes with a person's enjoyment or use of their own land.

Battery

A tort involving non-consensual, harmful, or offensive physical contact with another person.

Assault

An act that intentionally puts another person in reasonable apprehension of imminent harmful or offensive contact.