The IRS requires that the price or royalty rate for any cross-border transfer must be commensurate with income. What does this mean?
A) It must result in a fair distribution of income between units.
B) The IRS requires a higher royalty rate.
C) The royalty rate is given to the forced line.
D) A technology license is required.

Question

Quizplus · Accepted Answer

"Commensurate with income" means that the price or royalty rate for a cross-border transfer should be in line with the income earned or to be earned from the transfer. This is to ensure that there is a fair distribution of income between the related units involved in the transfer. The IRS requires that the transfer price or royalty rate should be comparable to what would have been charged between unrelated parties in a similar transaction. There is no requirement for a higher royalty rate or a technology license.

The IRS Requires That the Price or Royalty Rate for Any