What is the advantage of an advance pricing agreement?

Question

Quizplus · Accepted Answer

An advance pricing agreement (APA) provides the advantage that the Internal Revenue Service (IRS) will not challenge the transfer price after the tax return is filed if the agreement is followed. This helps to minimize the risk of tax audits and adjustments, resulting in more certainty and predictability in tax planning. Option B is incorrect as APAs only relate to the transfer pricing of a company and not world-wide taxes. Option C is incorrect as APAs require in-depth analysis and documentation and cannot be completed with minimal effort.

What Is the Advantage of an Advance Pricing Agreement