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an independent sale price from comparable uncontrolled
transactions, or if an independent sale price from comparable
uncontrolled transactions cannot be determined, then the sale
price is determined using a production cost ratio method. This
first requirement is not at issue for purposes of the instant
motion;
(2) the possessions corporation must determine its costs
attributable to the possession product under section 1.861-8,
Income Tax Regs.;
(3) the possessions corporation must determine its expenses
allocable and apportionable to the possession product under
section 1.861-8, Income Tax Regs.;
(4) each member of the affiliated group must determine its
costs attributable to the possession product under section 1.861-
8, Income Tax Regs; and
(5) each member of the affiliated group must determine its
expenses allocable and apportionable to the integrated product
under section 1.861-8, Income Tax Regs.
Finally, Q&A-12 requires that each affiliate apportion to
the possession product on the basis of the ratio of the
production costs for the possession product to the total
production costs for the integrated product, the expenses the
affiliate allocated and apportioned to the integrated product.
In our second example, the total production costs associated
with the integrated product equal 80 cents per unit, and the
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