What Is a Prime Reason That the IRS Has Found

question 31

Multiple Choice

What is a prime reason that the IRS has found it difficult to obtain information needed to examine the transfer pricing scheme of foreign parents with U.S. subsidiaries?

• A) The information is held by the foreign parent, which is beyond the jurisdiction of the U.S. taxing authority.
• B) Since transfer pricing is not a significant issue to multinational corporations, little information about it exists.
• C) United States does not have tax treaties with the most important countries involved in foreign direct investment in this country.
• D) Computer systems have not been adapted to receive the data from companies in foreign countries.

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Definitions:

Glycoproteins

Proteins that have carbohydrate groups attached to the polypeptide chain, playing key roles in cellular functions such as cell-to-cell interaction.

Phospholipids

A class of lipids that are a major component of all cell membranes as they can form lipid bilayers.

Hydrophilic Head

The part of a molecule, especially in lipids, that is attracted to water, allowing it to interact favorably with aqueous environments.

Hydrophobic Tails

Parts of molecules that are repelled by water but are attracted to fats and oils, often found in lipid structures such as cell membranes.