- 216 - supporting services--to determine whether the 25-percent test applies. Sec. 1.482-2(b)(7)(v), Example (8), Income Tax Regs. We find that the services that INC rendered were in the nature of supporting services for purposes of section 1.482-2(b)(7)(ii), Income Tax Regs. The factor of whether the services that INC rendered to LTD were independent of the other activities of INC is not applicable to the instant case. INC performed very few, if any, "other" activities that were not for LTD. Consequently, the services that INC rendered to LTD cannot be viewed as "independent" of the "other activities" of INC because INC had few "other activities". Accordingly, we believe that the factor of "independent" services is not relevant to the instant cases. Based on the foregoing, we conclude that, pursuant to the facts and circumstances test, INC renders services to a related party as one of its principal activities within the meaning of section 1.482-2(b)(7)(ii)(a), Income Tax Regs. Consequently, we hold that the services are an integral part of the business activity of INC within the meaning of section 1.482-2(b)(7), Income Tax Regs. Because services are an integral part of INC's business activity, an arm’s-length charge for INC's services rendered to LTD is "the amount which was charged or would have been charged for the same or similar services in independent transactions with or between unrelated parties under similar circumstances considering all relevant facts." Sec. 1.482- 2(b)(3), Income Tax Regs.Page: Previous 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 Next
Last modified: May 25, 2011