Schedule P (Form 1120-Ic-Disc) - Intercompany Transfer Price Or Commission Page 2
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Schedule P (Form 1120-IC-DISC) (Rev. 9-2017)
Page
Part II
Transfer Price From Related Supplier to IC-DISC (See instructions.)
24
Gross receipts from transaction. Enter amount from line 1 or line 4, Part I .
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24
25
Less reductions:
a IC-DISC taxable income (but not to exceed amount determined in Part I) .
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25a
b IC-DISC export promotion expenses allocable to gross income from transaction .
25b
c Other IC-DISC expenses allocable to gross income from transaction
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25c
d Add lines 25a through 25c
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25d
26
Transfer price from related supplier to IC-DISC. Subtract line 25d from line 24 .
26
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Part III
IC-DISC Commission From Related Supplier (See instructions.)
27
IC-DISC taxable income (but not to exceed amount determined in Part I) .
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27
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28
IC-DISC export promotion expenses allocable to gross receipts from transaction .
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29
Other IC-DISC expenses allocable to gross receipts from transaction .
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29
30
IC-DISC commission from related supplier. Add lines 27 through 29
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30
Instructions
transaction to an amount that is no more than
For purposes of line 2d, be sure to include
the sum of (1) 50% (0.50) of the IC-DISC’s
the appropriate apportionment of deductions
Section references are to the Internal Revenue
and related supplier’s combined taxable
that are not directly allocable such as interest
Code unless otherwise noted.
income attributable to the qualified export
expenses and stewardship expenses. See
receipts from the transaction and (2) 10%
Temporary Regulations sections 1.861-11T(f)
Purpose of schedule. Use Schedule P to
(0.10) of the IC-DISC’s export promotion
and 1.861-14T(f) for an explanation of
show the computation of taxable income used
expenses (as defined in Regulations section
appropriate apportionment.
in computing (1) the transfer price from a
1.994-1(f)) attributable to the qualified export
related supplier to an IC-DISC (Part II), or (2)
Complete Section A-2 if marginal costing is
receipts. Do not include in combined taxable
the IC-DISC commission from a related
used. The marginal costing rules may be used
income (line 13) the discount amount reflected
supplier (Part III).
only for sales, or commissions on sales, of
in receivables (on the sale of export property)
property if the 50-50 method is used.
Complete and attach a separate
that a related supplier transferred to the
Schedule P to Form 1120-IC-DISC for each
Marginal costing cannot be used for
IC-DISC. See Regulations sections
transaction or group of transactions to which
(1) leasing of property; (2) performance of
1.994-1(c)(3) and (6)(v).
the intercompany pricing rules of sections
services; or (3) sales of export property that
If marginal costing rules apply, see Part I,
994(a)(1) and (2) are applied.
(in the hands of a purchaser related under
Section A instructions below.
section 954(d)(3) to the seller) give rise to
IC-DISC taxable income. Generally, the
4% gross receipts method. The transfer
foreign base company sales income as
intercompany pricing determinations are to be
price charged by the related supplier to the
described in section 954(d) unless, for the
made on a transaction-by-transaction basis.
IC-DISC or IC-DISC commission from the
purchaser’s year in which it resells the
However, the IC-DISC may make an annual
related supplier is the amount that ensures
property, section 954(b)(3)(A) applies or the
election to determine intercompany pricing on
that the taxable income derived by the
income is under the exceptions in section
the basis of groups consisting of products or
IC-DISC from the transaction does not
954(b)(4).
product lines. If the group basis is elected,
exceed the sum of (1) 4% (0.04) of the
then all transactions for that product or
Line 10. The overall profit percentage may
qualified export receipts of the IC-DISC
product line must be grouped. Each group is
be computed under an optional method. See
derived from the transaction and (2) 10%
limited to one type of transaction (for
Regulations section 1.994-2(c)(2) for details.
(0.10) of the export promotion expenses (as
example, sales, leases, or commissions).
Part I, Section B and Section C. Complete
defined in Regulations section 1.994-1(f)) of
A product or product line determination will
Section B or Section C. If marginal costing is
the IC-DISC attributable to the qualified
be accepted if it conforms to either of the
used, you must complete Section B.
export receipts.
following standards: (1) a recognized industry
Line 22. If IC-DISC taxable income on a
Section 482 method. The transfer price the
or trade usage, or (2) major product groups
sale is computed under the 4% method and
related supplier charged the IC-DISC, or
(or any subclassifications within a major
the IC-DISC chooses to apply the special rule
IC-DISC commission from the related
product group) (see Schedule P (Form 1120-
for transfer prices or commissions, check the
supplier, is the amount actually charged, but
IC-DISC) Codes for Principal Business Activity
box in line 22 and attach a separate
is subject to the arm’s length standard of
in the Instructions for Form 1120-IC-DISC).
statement showing the computation of the
section 482. Do not complete Schedule P if
The corporation may choose a product
limitation on IC-DISC taxable income
the section 482 method is used.
grouping for one product and use the
determined under the special rule and enter
transaction-by-transaction method for
Incomplete transactions. For the 50-50
the amount on line 22. Under the special rule,
another product within the same tax year.
and 4% methods, if the related supplier sells
a transfer price or commission will not be
property to the IC-DISC during the year but
Generally, the computation of taxable
considered to cause a loss for a related
the IC-DISC does not resell it during the year,
income under the intercompany pricing rules
supplier if the IC-DISC’s net profit on the sale
the related supplier’s transfer price to the
will not be permitted to the extent that their
does not exceed the IC-DISC’s and related
IC-DISC must equal the related supplier’s
application would result in a loss to the
supplier’s net profit percentage on all their
cost of goods sold. Do not complete
related supplier.
sales of the product or product line. See
Schedule P for incomplete transactions. The
Regulations section 1.994-1(e)(1)(ii) for details.
Each of the following methods may be
related supplier’s transfer price to the
applied for sales, leases, and services. See
Reporting Part II and Part III amounts on
IC-DISC must be recomputed for the year in
the regulations under section 994.
Form 1120-IC-DISC. If the computed
which the IC-DISC resells the property and
transfer price for sales, leases, or services
50-50 combined taxable income method.
the transaction must then be reported on
(Part II) or IC-DISC commission (Part III) is
The transfer price the related supplier charges
Schedule P for that year.
entered on more than one line of Form
the IC-DISC, or the related supplier’s IC-DISC
Part I, Section A—Combined Taxable
1120-IC-DISC, attach an explanation
commission, is the amount that lowers the
Income. Complete Section A-1 only if
indicating the portion of the total that is
taxable income the IC-DISC derives from the
marginal costing is not used.
applied to each line.
Schedule P (Form 1120-IC-DISC) (Rev. 9-2017)
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