Appraisal Economics Inc. has performed a transfer pricing study for a multinational financial investment advisory firm. We used the Comparable Profits Method (CPM) to determine the appropriate rate that the Mexicanbased advisory company should charge its U.S.based affiliate, both in terms of profit margin and a markup on costs incurred. This allows the firms to comply with U.S. Treasury Regulation Section §1.66626(b)(3), which requires the firms to demonstrate reasonable cause and good faith that the transfer price between the entities in different jurisdictions complies with Internal Revenue Code Section §1.482. This ensures that the taxpayers properly account for income attributable to transactions with controlled or related affiliates in each country.
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