LB&I: “Practice units” on foreign-to-foreign transactions, transfer pricing rules

Practice units on foreign-to-foreign, transfer pricing

The IRS today publicly released two new “practice units”—i.e., training aids intended to describe for IRS agents leading practices for specific international and transfer pricing issues and transactions—providing overviews of foreign-to-foreign transactions under section 367(b) and the transfer pricing rules under section 482.


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The two new practice units (release date of August 28, 2015) are available on the IRS practice unit webpage and reflect earlier indications from the IRS that approximately 100 practice units would be released over the coming months.

Taxpayer considerations

Taxpayers currently under IRS examination or with an examination pending—particularly if a challenge to the taxpayer’s transfer pricing treatment or to a particular transaction is expected—might find it helpful to review the pertinent practice units. The practice units identify areas of strategic importance to the IRS, provide insight as to how examiners may approach various transactions, and can provide an understanding of the context in which an examiner is approaching a particular issue or transaction.

The practice units often discuss the theories and legal authorities for examiners to rely upon when challenging a particular transaction, and identify documents an examiner will request and review. The practice units also explain the relevance of what is being reviewed in order to allow the examiner to fully understand a particular transaction and the position taken by a taxpayer.

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