A Cost-Plus Transfer Pricing Scheme Is Allowed by the Internal

question 42

Multiple Choice

A cost-plus transfer pricing scheme is allowed by the Internal Revenue Service when:

• A)it is easiest for the taxpayer to calculate.
• B)the related party is primarily a sales subsidiary.
• C)there is no readily comparable market price and the related buyer is more than just a distributor.
• D)the average industry mark-up is greater than the taxpayer's standard markup.

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Definitions:

Hydrocarbon

is an organic compound consisting entirely of hydrogen and carbon atoms, commonly found in fossil fuels and as the basis of various organic substances.

Petroleum

A naturally occurring liquid found beneath the Earth's surface that can be refined into fuel and various chemical products.

Commercial Energy

Energy that is produced and sold commercially, often in the form of electricity, natural gas, oil, and coal.

United States

A country in North America composed of 50 states, a federal district, five major self-governing territories, and various possessions.