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2. Law
a. Section 482 in General
Section 48230 provides the Commissioner with broad authority
to allocate income, deductions, credits, or allowances between
commonly controlled organizations, trades, or businesses if
respondent determines that the reallocation is necessary to
prevent the evasion of taxes or clearly to reflect the income of
any of the controlled entities.
The purpose of section 482 is "to place a controlled
taxpayer on a tax parity with an uncontrolled taxpayer, by
determining, according to the standard of an uncontrolled
taxpayer, the true taxable income from the property and business
of a controlled taxpayer." Sec. 1.482-1(b)(1), Income Tax Regs.
Stated another way, the purpose of section 482 is to prevent the
artificial shifting of the net incomes of controlled taxpayers by
30
Sec. 482 provides as follows:
In any case of two or more organizations, trades,
or businesses (whether or not incorporated, whether or
not organized in the United States and whether or not
affiliated) owned or controlled directly or indirectly
by the same interests, the Secretary may distribute,
apportion, or allocate gross income, deductions,
credits, or allowances between or among such
organizations, trades, or businesses, if he determines
that such distribution, apportionment, or allocation is
necessary in order to prevent evasion of taxes or
clearly to reflect the income of any of such
organizations, trades, or businesses.
The amendment to sec. 482 by 1986 Act sec. 1231(e)(1), 100
Stat 2562, regarding the transfer of intangible property does not
affect the instant case.
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