- 11 - commission DISC. Brown-Forman Corp. v. Commissioner, supra at 926-927. Although the section 994(a) pricing rules literally applied only to a buy-sell DISC, they were adopted for commission DISC's pursuant to statutory authority granted to the Secretary. Sec. 994(b)(1); sec. 1.994-1(d)(2)(i), Income Tax Regs. In 1984, Congress enacted the FSC provisions (sections 921 through 927) to replace and cure certain perceived shortcomings in the DISC provisions for taxable years beginning after December 31, 1984. Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 801(a), 98 Stat. 494, 985; S. Prt. 98-169 (Vol. 1), at 636 (1984); see Brown-Forman Corp. v. Commissioner, supra at 924-925, 946. The Senate Finance Committee explanation of the FSC legislation states that In general, where the provisions of the bill are identical or substantially similar to the DISC provisions under present law, the committee intends that rules comparable to the rules in regulations issued under those provisions will be applied to the FSC. [S. Prt. 98-169 (Vol. 1), supra at 636.] As with DISC's, under the FSC provisions, the FSC and its related supplier remain subject to section 482 but may elect between two safe harbor pricing methods to determine the profit of the FSC in order to avoid the complexities of section 482. Sec. 925(a)(1) and (2). The transfer pricing rules applicable to FSC's are analogous to the rules applicable to DISC's. Secs. 925(a), 994(a); General Dynamics Corp. & Subs. v. Commissioner, supra at 117-118. The FSC and related supplier may, subject toPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011