Rules on Combining Transactions Could Sharpen IRS Edge on Deals

U.S. multinationals could face an IRS with more authority to decide how to value their intercompany transactions under “aggregation"-method rules the agency is seeking to make final.

Temporary regulations under tax code Section 482 allow the Internal Revenue Service to use a whole-is-greater-than-the-sum-of-the-parts approach, the aggregation method, to value a multinational’s interrelated intercompany transactions, when that method provides a more reliable valuation.

The IRS wants to make these 2015 temporary regulations (T.D. 9738) permanent. The temporary rules, which are set to expire Sept. 14, let the IRS apply the aggregation method more broadly than under previous rules or the ...