Overview and Considerations for Domestic Transfer Pricing

  • Of states that impose a corporate income tax, 20 require separate entity reporting.
  • Transfer pricing for companies located in these states are of utmost importance.
  • Tax authority audits focused in this area necessitate the need for transfer pricing documentation.
  • Additionally, planning opportunities exist to reduce effective tax rates.
Overview

Nearly all states that impose a corporate income tax begin their income tax calculation with a direct tie-in to the federal taxable income that the taxpayer reported to the federal government. While each state has its own state-specific nuances (e.g., sourcing of receipts, decoupling from bonus depreciation), the main issue in state corporate income taxation is whether the state requires mandatory combined reporting or separate entity reporting.

CONTRIBUTORS

Matt Gentile
Director
matt.gentile@dhg.com

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