LB&I: “Practice unit" on outbound tangible property sales

Intangibles, services with outbound property sales

The IRS today publicly released a new “practice unit”—a training aid intended to describe for IRS agents leading practices for specific international and transfer pricing issues and transactions—providing guidance on accounting for intangibles and services associated with the outbound sales of tangible property.

Related content

The new practice unit (release date of September 9, 2015) is available on the IRS practice unit webpage, and appears to be part of the IRS's plan to issue 100 practice units over coming months.

Implications for taxpayers

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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