Which of the Following Statements Regarding Internal Revenue Code Section

question 89

Multiple Choice

Which of the following statements regarding Internal Revenue Code Section 482 is false?

• A) Section 482 applies if related corporations charge each other arms-length transfer prices.
• B) Section 482 is designed to prevent shifting of income from a high tax rate member of a related group to a low tax rate member.
• C) The prevailing attitude of the courts is that the IRS's determination of transfer price should be upheld unless the taxpayer can show that the IRS was arbitrary or capricious.
• D) Section 482 can be used to override artificial transfer prices established between related parties.

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Definitions:

Marginal Product

The additional output generated by employing one more unit of a specific factor of production.

Total Product

The total quantity of output produced by a firm during a given period of time.

Labor Intensive

A production process that requires a higher proportion of labor compared to capital in the production of goods and services.

Alternative Technologies

Different or novel technological solutions or methods that can be used as substitutes for existing technologies to perform similar functions.