IRS AM: Periodic Adjustments, Arm’s Length Standard, Allocation of Income and Deductions Among Taxpayers (IRC §482)

The Chief Counsel’s Office advised (in 2 scenarios) on the relationship between several provisions of the I.R.C. §482 regulations: the general arm’s length standard (ALS) in Treas. Reg. § 1.482-1(b)(1) and the specific periodic adjustment rules in Reg. §1.482-4(f)(2) and Reg. §1.482-7(i)6). The issue addressed is: if the IRS makes a periodic adjustment under Reg. §1.482-4(f)(2) or Reg. §1.482-7(i)(6)2 with respect to high-profit-potential intangible property transferred or contributed to a cost sharing arrangement, and none of the specific exceptions in Reg. §1.482-4(f)(2)(ii) or Reg. §1.482-7(i)(6)(vi), respectively, applies, may the taxpayer still overcome the periodic adjustment by invoking the general ALS ...