Market-based transfer prices are generally accepted by tax authorities because they represent arm's length prices.

Question

Quizplus · Accepted Answer

Market-based transfer prices are based on prices established in actual market transactions between unrelated parties, which reflect arm's length prices. As a result, tax authorities generally accept market-based transfer prices as a fair and reasonable way to allocate income and expenses among related parties.

Market-Based Transfer Prices Are Generally Accepted by Tax Authorities Because