Our Experience

Industries Petroleum Natural Gas Chemicals Electronics Pharmaceuticals, Medical Devices, & Biotech Retail/Consumer Goods Technology Transportation Local/State Government School Districts Other Industries

Functional Areas Antitrust & Competition Analysis of Damages Forensic Economics Intangibles/IP Labor Economics Regulatory Economics & Finance Transfer Pricing Taxation Valuation Fiscal Impact Analysis Demographic Analysis Public Policy Analysis

 

Transfer Pricing

As industries and markets compete increasingly on a global scale, issues related to determining the proper arm’s-length prices among controlled subsidiaries has assumed much greater importance. Also as a result, U.S. and international tax authorities have increased the level of attention concerning transfer pricing, licensing of intangibles, and cost sharing arrangements. IIC, Inc. is a nationally-recognized firm in the area of transfer pricing, and we have assisted numerous clients in analyzing various issues that arise under Section 482 of the Internal Revenue Code as well as other transfer pricing regulations.

Our experience encompasses all aspects of the Section 482 regulations including analysis of the provision of services; this includes determining whether the services qualify under the cost safe-harbor test, and if not, specifying what the arm’s-length mark-up should be. We are also very knowledgeable about the “new” services regulations, including the services cost method, and the covered (eligible) and excluded services under these new rules. Clients have engaged our firm numerous times to determine the arm’s-length transfer prices for tangible property using the various methods proscribed by the regulations and to determine the transfer prices, values, and royalties for the use of intangible property. We have also worked on numerous studies involving the cost-sharing portion of the transfer pricing regulations, and have computed buy-in and buy-out payments, as well as estimated the reasonably anticipated benefits of the cost sharing partners.

Seminars on Valuation Issues

The firm has developed educational materials for seminars for economists and others to further their understanding of the valuation of intangibles and issues related to cost-sharing agreements. These seminars have presented hypothetical case studies and other material to focus on cost-sharing agreements and intangibles valuation under the Section 482 regulations.

Expert Testimony on Arm’s-Length Crude Oil Prices

We have provided expert testimony in U.S. Tax Court regarding the proper arm’s-length prices for various crude oils produced abroad and imported into the United States. This work involved a detailed analysis of world petroleum markets and crude oil pricing trends, focusing specifically on the inter-company pricing by several different companies of Saudi Arabian crude oils. IIC, Inc. analyzed third-party transactions involving Arabian and non-Arabian crude oils as well as other economic factors to determine arm’s length prices for the transfer of Saudi crude oils among affiliated entities. We also eval­uated various factors influenc­ing refiners’ demand for crude oils during this period and the refining operations and profitabili­ty of a number of refin­ers that processed Arabian crude oils during this period using various model­ing techniques.

Analysis of Pricing for Products Transferred to CFCs

IIC, Inc. analyzed and prepared several expert reports regarding the transfer pricing of a large number of different products manufactured or acquired domestically by a U.S. company and transferred overseas to various controlled foreign corporations (CFCs). We utilized a resale price method for valuing certain products and applied a modified-CUP method for others; a cost-plus method and various profitability studies were performed to justify the transfer prices we computed.

Valuation of Intangibles and Services in Oil Exploration Industry

IIC, Inc. has analyzed the value of certain intangibles and various services in the oil exploration and services industries for purposes of evaluating whether an adjustment under the services portion of the Section 482 regulations was justified for a particular taxpayer. We applied a comparable profit analysis to develop a value for these intangibles, as well as evaluated certain third-party transaction data to validate the CPM-derived values. We also examined the state of technology in the industry to determine the extent to which this taxpayer was uniquely qualified to deliver these services.

Cost-Sharing Agreements in Pharmaceutical Industry

IIC, Inc. analyzed various cost sharing agreements in the pharmaceutical and medical products industries and associated buy-in and buy-out payments for the transfer of intellectual property related to these agreements. We have valued the intangible property under these agreements and estimated the reasonably anticipated benefits accruing from such intangibles. We have computed running royalty payments and lump sum payments as compensation for the buy-in and buy-out payments and reviewed and analyzed the expert reports provided by others on these issues.

Development of Alternative Valuation Methods

The firm developed a royalty rate and a buy-in payment under an R&D cost sharing agreement as alternative methods for valuing certain aspects of foreign software technology purchased by a domestic software company. In addition, we analyzed the stock values of certain of the foreign companies that had been acquired as corroboration for the buy-in payments. IIC, Inc. also critiqued the analysis of the opposing expert and assisted counsel in resolving the matter prior to trial.