IRS Legal Memo Suggests Closer Scrutiny of Intercompany Loans

An IRS legal-advice memo on how to treat loans from one part of a corporate group to another suggests the agency is ramping up its attention to a transfer-pricing area in which taxpayers are pushing back against doing things the way the IRS wants.

The Office of Chief Counsel memo, issued last December, said the IRS can consider a company’s membership in a corporate group when determining what the interest rate should be when it borrows money from another group member. That suggests a parent company would have to offer lower rates when it lends to a subsidiary than ...