An Advanced Pricing Agreement is a requirement with the IRS and a taxpayer on transfer pricing methods that will be applied to the taxpayer's transactions with an affiliate.

Question

Quizplus · Accepted Answer

An Advanced Pricing Agreement (APA) is a legal agreement between the IRS and a taxpayer that outlines the transfer pricing methods that will be applied to the taxpayer's transactions with an affiliate. It is a proactive measure taken by taxpayers to avoid disputes with the IRS regarding transfer pricing. Therefore, the statement is true.

An Advanced Pricing Agreement Is a Requirement with the IRS