- 13 -
supra at 118; sec. 1.925(a)-1T(d)(2), Temporary Income Tax Regs.,
52 Fed. Reg. 6447 (Mar. 3, 1987).
The Regulation was adopted as part of a comprehensive set of
temporary regulations intended to "provide immediate guidance
necessary to FSC's and their shareholders with respect to
provisions under Title VIII of the Tax Reform Act of 1984
(Foreign Sales Corporations)" and is effective for taxable years
beginning after December 31, 1984. T.D. 8126, 1987-1 C.B. 184,
191-211. The Regulation provides as follows (bracketed numerals
supplied):
(4) Subsequent determination of transfer price,
rental income or commission. [1] The FSC and its
related supplier would ordinarily determine under
section 925 and this section the transfer price or
rental payment payable by the FSC or the commission
payable to the FSC for a transaction before the FSC
files its return for the taxable year of the
transaction. [2] After the FSC has filed its return,
a redetermination of those amounts by the Commissioner
may only be made if specifically permitted by a Code
provision or regulations under the Code. [3] Such a
redetermination would include a redetermination by
reason of an adjustment under section 482 and the
regulations under that section or section 861 and
� 1.861-8 which affects the amounts which entered into
the determination. [4] In addition, a redetermination
may be made by the FSC and related supplier if their
taxable years are still open under the statute of
limitations for making claims for refund under section
6511 if they determine that a different transfer
pricing method or grouping of transactions may be more
beneficial. [5] Also, the FSC and related supplier
may redetermine the amount of foreign trading gross
receipts and the amount of costs and expenses that are
used to determine the FSC's and related supplier's
profits under the transfer pricing methods. [6] Any
redetermination shall affect both the FSC and the
related supplier. [7] The FSC and the related
supplier may not redetermine that the FSC was operating
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