Extract to table

Key Conclusion: The TCJA rate reduction substantially reduces PPC's aggregate transfer pricing exposure on a tax-dollar basis for TY 2018–2020, but introduces new analytical complexities — principally the GILTI inclusion offset and the need to confirm BEAT non-applicability — that must be addressed in the defense strategy

The IRS may not voluntarily allow conforming GILTI reductions when proposing § 482 adjustments, and PPC must affirmatively assert its right to such reductions

However, such payments are not the subject of the current IRS examination, and their magnitude relative to PPC's total deductions must be evaluated to determine whether the 3% base erosion percentage threshold is met

The following issues must be addressed: Related-Party Limitations

For sales of property to a related party, the property must be "for a foreign use" — that is, the property must ultimately be sold to an unrelated foreign person or used in connection with property that is sold to an unrelated foreign person, or the property must be used by the related party in the active conduct of a trade or business outside the United States

Rate Differential in Settlement Calculations Any settlement analysis must separately model the tax-dollar impact of adjustments for TY 2017 at the 35% rate and for TY 2018–2020 at the 21% rate