What is the purpose of section 482?

What is the purpose of section 482?

Section 482 of the Code authorizes the IRS to adjust the income, deductions ,credits, or allowances of commonly controlled taxpayers to prevent evasion of taxes or to clearly reflect their income.

Does 482 apply to individuals?

NOTE: IRC 482 applies to domestic transactions as well as international transactions. Per Treas. Reg. 1.482-1(i)(2) a “trade or business” means: A trade or business activity of any kind regardless of: ▪ Place of organization; formal organization; type of ownership (individual or otherwise); place of operation.

Why are non arm’s length transactions a problem?

A non-arm’s length transaction is a higher risk to lenders because of possible inflated sales prices, unsupported values, and misrepresentation. As such, qualifying for financing if you’re purchasing a home from a relative can be more difficult.

What are US transfer regulations?

The US transfer pricing regime seeks to ensure that goods and services transferred between related companies are done so at an arm’s length and are priced based on market conditions that permit profits to be reflected in the appropriate tax jurisdiction.

How does the IRS define a related person?

Generally, and for this purpose (disallowance of a loss), the IRS defines related parties to be [Code Section 267(b)]: • The seller’s immediate family: brothers or sisters (whole or half-blood), spouses, ancestors, and lineal descendants. In-laws are not considered members of the seller’s family.

What is a controlled taxpayer?

(4) The term “controlled taxpayer” means any one of two or more organizations, trades, or businesses owned or controlled directly or indirectly by the same interests. (5) The terms “group” and “group of controlled taxpayers” mean the organizations, trades, or businesses owned or controlled by the same interests.

What qualifies as a non arm’s length transaction?

Non-arm’s length transactions are purchase transactions in which there is a relationship or business affiliation between the seller and the buyer of the property.

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