Federal Tax Research 10th Edition by Steven Gill, Gerald Whittenburg, Roby Sawyers, Debra Sanders, William Raabe

Exercise 123

Jamaica Corp. (established under the laws of Jamaica) seeks to borrow funds from a Jamaican financial institution. In order to process the loan, the local Jamaican bank requires that U.S. Corp., the sole shareholder of Jamaica Corp., provide a guarantee on the loan. Jamaica Corp. pays its loan off in accordance with the terms of the loan and no call is made on U.S. Corp.'s guarantee. Does the mere presence of a guarantee require U.S. Corp. and Jamaica Corp. to reflect transfer pricing costs under I.R.C. § 482