Georgetown University Law Center
Transfer Pricing: Selected Topics
LAWG-743-11
(CRN #: 10898)
Professors David Ernick
and David Fischer
Spring 2015
Joe Tobin
,
The course is designed to provide a practical, historical, and theoretical understanding of
international transfer pricing as it is practiced today, along with exposure to important related
areas of taxation.
Reading assignments will be taken from: (i) duplicated materials to be handed out in class; and
(ii) the Code and Regulations (which students will be expected to own). Because new
developments related to transfer pricing arise frequently, it is likely that the reading list will be
augmented or otherwise revised during the term.
For your convenience, we have included a bibliography of recommended readings and a list of
court cases.
Grading will be based on the following factors: 1) 10% on class participation; 2) 10% on in-class
paper presentation (approximately 20-30 minutes); and 3) 80% on final written paper (at least 25
pages). Class participation is essential to make this a good class; consequently, regular and
punctual attendance is required, in accordance with the policy published in the Student
Handbook. Papers are expected to reflect original writing and the guidance in the Student
Handbook on citing and referencing another’s work must be followed. All three professors
are available to you at any time throughout the semester; please feel free to contact us via email
with any questions.
The current class schedule is as follows:
Class 1: Introduction; Common Control; Transfer Pricing Regulations - Fundamental
Concepts
(Monday, January 12, 2015)
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Class logistics
Background of Section 482
Common Control
The Arm’s Length Standard
Formulary Apportionment
Reading Assignment:
Code § 482
Treas. Reg. §§ 1.482-1(a), (b) and (i)
B. Forman Co., Inc. v. Commissioner, 453 F.2d 1144 (2nd Cir. 1972), rev‟g in part 54
T.C. 912, cert. denied, 407 U.S. 934 (1972)
Andrus, Bennett, and Silberztein, "The Arm‟s-Length Principle and Developing
Economies," Tax Management Transfer Pricing Report, 20 TM TPR 495 (October 20,
2011).
Optional: Chapter 1, and Chapter 2 ¶¶ 201 through 260, of “Transfer Pricing: Rules,
Compliance and Controversy,” Marc Levey and Steven Wrappe (3rd edition) (“Levey and
Wrappe”)
No Class: MLK Birthday
(Monday, January 19, 2015)
Class 2: Transfer Pricing Regulations - Fundamental Concepts (Cont'd); Intangibles and
Commensurate-with-Income
(Monday, January 26, 2015)
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The Best Method Rule
Comparability (Functions, Risks, Contractual Terms)
Arm's Length Range
Methods for Intangible Property Transactions
Commensurate-with-Income
Cost-Sharing of Intangibles
Reading Assignment:
Treas. Reg. § 1.482-1(c), (d), (e), and (f); Treas. Reg. § 1.482-3 (skim); Treas.
Reg. §§ 1.482-4(a) through (f); Treas. Reg. § 1.482-5; Treas. Reg. § 1.482-6; Treas.
Reg. § 1.482-7 (skim);
IRS Generic Legal Advice Memorandum 2007-007 (IRS AM 2007-007) (March 15,
2007) on Taxpayer Use of Section 482 and the Commensurate With Income Standard
Veritas v. Commissioner, 133 T.C. No. 14 (2009), A.O.D. 2010-5
Optional: Chapters 3 and 4, Levey and Wrappe
Class 3: Transfer Pricing Regulations - Intangibles (Cont'd) and Services; Dispute
Resolution; Other Topics
(Monday, February 2, 2015)
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Intangibles-continued (Cost-sharing, Ownership, Business restructuring)
Methods for Services Transactions
Dispute Resolution (APA Program, Treaties and Competent Authority)
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Documentation and Penalties
Other topics (Attribution of Profits to Permanent Establishments, OECD Transfer Pricing
Guidelines, Application of section 482 to non-recognition transactions, etc.)
Reading Assignment:
Treas. Reg. 1.482-9 (skim)
Optional: Notice 88-123, 1988-2 C.B. 458, 1988 Whitepaper, A Study of Intercompany
Pricing under Section 482 of the Code. (Read all of Chapter 1; For Chapters 2 through
13, read only the introduction (entitled either section A or introduction) and the
conclusion (entitled section E)).
Optional: Chapter 5, Levey and Wrappe.
Writing Assignment:
Preliminary Topic Choice
 Submit written statement of topic
Class 4: Transfers of Intangibles under Section 367(d); Reform Proposals (Alternatives to
the Arm’s Length Standard)
(Monday, February 9, 2015)
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Transfers of Intangibles under Section 367(d)
Patent box
Formulary apportionment
Excess returns
Reading assignment
Code § 936(h)(3)(B); Treas. Reg. § 1.482-4(b) and (f)
Code § 367(a), (d); Temp. Treas. Reg. § 1.367(a)-1T(c)(5)(i), (iii); Temp. Treas.
Reg. § 1.367(d)-1T(a) through (c); Temp. Treas. Reg. §1.367(d)-1T(g)(4)
Merrill, “Is It Time for the United States to Consider the Patent Box?,” Tax Notes, March
26, 2012, available at: http://www.pwc.com/en US/us/washington-nationaltax/assets/Merrill0326.pdf
No Class: President’s Day Break
(Monday, February 16, 2015)
Class 5: Cost Sharing Regulations
(Thursday, February 19, 2015) – Monday classes meet instead of Thursday classes
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Reading Assignment:
Treas. Reg. § 1.482-7 (Dec. 27, 2011) (Read the preamble; skim the regulations.)
Veritas v. Commissioner, 133 T.C. No. 14 (2009) (review from class 2)
Xilinx v. Commissioner, 598 F.3d 1191 (9th Cir. 2010)
Dolores Gregory, IRS in Altera Repeats Arguments Used in Xilinx—But Also Asserts
Arm's-Length Standard „Created by Treasury,‟ 22 Transfer Pricing Report 847 (Nov. 14,
2013)
Class 6: Authorized OECD Approach for Attributing Profits to Permanent Establishments
and Business Restructurings
(Monday, February 23, 2015)
Reading Assignment:
Organisation for Economic Co-Cooperation and Development, "2010 Report on the
Attribution of Profits to Permanent Establishments" (July 22, 2010), available at:
http://www.oecd.org/ctp/transfer-pricing/45689524.pdf. Read: Part I, sections A and B;
Skim rest of Part I.
Skim: Organisation for Economic Co-Operation and Development, “Report on the
Transfer Pricing Aspects of Business Restructurings, Chapter IX of the Transfer Pricing
Guidelines” (July 22 2010), available at: http://www.oecd.org/tax/transferpricing/45690216.pdf.
Writing Assignment:
Final Topic Choice:
 Submit one to two page outline of issues to be addressed in your paper &
bibliography (minimum of 10 sources) by 5:00 pm Feb. 24;
 Discuss with Professor by end of class on 3/2
Class 7: Role of Economic Analysis in Transfer Pricing
(Monday, March 2, 2015)
Lecturer: R. William Morgan, Senior Advisor to the Director of Transfer Pricing, IRS
Reading Assignment:
Read Compaq v. Commissioner, T.C. Memo 1999-220; Mr. Morgan will discuss in class
Joint Committee on Taxation, Report on Transfer Pricing, July 20, 2010, JCX-37-10,
available at: https://www.jct.gov/publications.html?func=startdown&id=3692 (skim)
Read Testimony of R. William Morgan, Managing Director, Horst Frisch Incorporated,
Ways and Means Committee Hearing on Transfer Pricing, July 22, 2010, available at:
http://waysandmeans.house.gov/media/pdf/111/2010jul22 morgan testimony.pdf
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No Class: Spring Break
(Monday, March 9, 2015)
Class 8: Recent Developments at the OECD and the UN
(Monday, March 16, 2015)
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OECD Project on Base Erosion and Profit Shifting
Revised Definition of Intangibles
Safe Harbors
Documentation/Country by Country Reporting
Allocation of Head Office Expense
Taxpayer Risk Assessment
Location Savings/Market Premium
Cross Border Financial Dealings (Arm’s Length Interest Rates and Debt Levels)
Reading Assignment:
OECD Action Plan on Base Erosion and Profit Shifting (skim):
http://www.oecd.org/ctp/BEPSActionPlan.pdf
OECD Guidance on Transfer Pricing Aspects of Intangibles (skim):
http://www.oecdilibrary.org/docserver/download/2314291e.pdf?expires=1417918131&id=id&accname=g
uest&checksum=CE3EDB4DB4A09C2A8C8A220BD95520B6
OECD Guidance on transfer pricing documentation and country-by-country reporting
(skim): http://www.oecdilibrary.org/docserver/download/2314301e.pdf?expires=1417918041&id=id&accname=g
uest&checksum=4FE7ABC8BC4DC7F427327FAD95ACC723
UN Practical Transfer Pricing Manual for Developing Countries (read the Foreword):
http://www.un.org/esa/ffd/wp-content/uploads/2014/08/UN Manual TransferPricing.pdf
Writing Assignment: 1st drafts due by 5:00 pm March 17. (Professor has discretion to lower
student’s final grade by one grade for each day that 1st draft is late.)
Class 9: Transfer Pricing Planning and Business Restructurings
(Monday, March 23, 2015)
Lecturer: David Canale, Partner, Ernst & Young
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General
Commissionaire
Contract Manufacturer
Intangibles/Cost Sharing
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Reading Assignment:
Materials To Be Provided
Class 10: Paper Presentations (approximately 20 minutes each)
(Monday, March 31, 2015)
Class 11: Paper Presentations (Continued)
(Monday, April 6, 2015)
Writing Assignment: Comments from Professors on 1st drafts
Class 12: Paper Presentations (Continued)
(Monday, April 13, 2015)
Class 13: Paper Presentations
(Monday, April 20, 2015)
Class 14: Paper Presentations (Last Class)
(Monday, April 27, 2015)
April 27, 2015: ALL PAPERS DUE BY 5:00 PM FOR MAY GRADUATES
May 10, 2015: ALL OTHER PAPERS DUE BY 5:00 PM
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Georgetown University Law Center
Transfer Pricing: Selected Topics
LAWG-743-11, (CRN #: 10898)
Professors David Ernick
, Joe Tobin
and David Fischer
Spring 2015
,
Transfer Pricing Bibliography
Journals:
Tax Management Transfer Pricing Report (Available online at Bloomberg BNA Tax and
Accounting Center)
Transfer Pricing International Journal (Available online at Bloomberg BNA Tax and Accounting
Center)
Refernce Books:
David B. Blair, Transfer Pricing Answer Book 2013 (Practising Law Institute, 2013)
Robert T. Cole, Practical Guide to U.S. Transfer Pricing (LexisNexis 3rd Ed., 2011).
Mark Levey and Steven Wrappe, Transfer Pricing: Rules, Compliance, and Controversy (CCH
3rd ed. 2010).
Cym Lowell and Mark Martin, Transfer Pricing Strategies (Thomson Reuters 2013)
PwC International Transfer Pricing 2013/14, available online at:
http://www.pwc.com/gx/en/international-transfer-pricing/assets/itp-2013-final.pdf
BNA Portfolios (current)
Transfer Pricing: Alternative Practical Strategies (890)
Transfer Pricing: Economic, Managerial, and Accounting Principles (889)
Transfer Pricing: European Rules and Practice (895 and 896)
Transfer Pricing: Foreign Rules and Practice Outside of Europe (897 and 898)
Transfer Pricing: Introductory Materials (886)
Transfer Pricing: Judicial Strategy and Outcomes (888)
Transfer Pricing: Records and Information (891)
Transfer Pricing: The Code and the Regulations (887)