Schedule P (Form 1120-Ic-Disc) - Intercompany Transfer Price Or Commission Page 2
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Schedule P (Form 1120-IC-DISC) (Rev. 12-2008)
Page
Transfer Price From Related Supplier to IC-DISC (See instructions.)
Part II
24
24
Gross receipts from transaction. Enter amount from line 1 or line 4, Part I
25
Less reductions:
25a
a IC-DISC taxable income (but not to exceed amount determined in Part I)
25b
b IC-DISC export promotion expenses allocable to gross income from transaction
25c
c
Other IC-DISC expenses allocable to gross income from transaction
25d
d
Add lines 25a through 25c
26
Transfer price from related supplier to IC-DISC. Subtract line 25d from line 24
26
Part III
IC-DISC Commission From Related Supplier (See instructions.)
27
27
IC-DISC taxable income (but not to exceed amount determined in Part I)
28
28
IC-DISC export promotion expenses allocable to gross receipts from transaction
29
29
Other IC-DISC expenses allocable to gross receipts from transaction
30
IC-DISC commission from related supplier. Add lines 27 through 29
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% of the IC-DISC’s and
the appropriate apportionment of deductions
related supplier’s combined taxable income
that are not directly allocable such as interest
Section references are to the Internal
attributable to the qualified export receipts
expenses and stewardship expenses. See
Revenue Code unless otherwise noted.
from the transaction and (2) 10% of the
Temporary Regulations sections 1.861-11T(f)
Purpose of schedule. Use Schedule P to
IC-DISC’s export promotion expenses (as
and 1.861-14T(f) for an explanation of
show the computation of taxable income
defined in Regulations section 1.994-1(f))
appropriate apportionment.
used in computing (1) the transfer price from
attributable to the qualified export receipts.
a related supplier to an IC-DISC (Part II) or (2)
Complete Section A-2 if marginal costing is
Do not include in combined taxable income
the IC-DISC commission from a related
used. The marginal costing rules may be used
(line 13) the discount amount reflected in
supplier (Part III).
only for sales, or commissions on sales, of
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
(1) leasing of property, (2) performance of
transaction or group of transactions to which
1.994-1(c)(3) and (6)(v).
services, or (3) sales of export property that
the intercompany pricing rules of sections
See Part I, Section A instructions below if
(in the hands of a purchaser related under
994(a)(1) and (2) are applied.
marginal costing rules apply.
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% of the qualified
then all transactions for that product or
Line 10. The overall profit percentage may
export receipts of the IC-DISC derived from
be computed under an optional method. See
product line must be grouped. Each group is
the transaction and (2) 10% of the export
Regulations section 1.994-2(c)(2) for details.
limited to one type of transaction (i.e., sales,
promotion expenses (as defined in
leases, or commissions).
Part I, Section B and Section C. Complete
Regulations section 1.994-1(f)) of the IC-DISC
Section B or Section C. You must complete
A product or product line determination will
attributable to the qualified export receipts.
Section B if marginal costing is used.
be accepted if it conforms to either of the
Section 482 method. The transfer price
following standards: (1) a recognized industry
Line 22. If IC-DISC taxable income on a
the related supplier charged the IC-DISC, or
or trade usage or (2) major product groups (or
sale is computed under the 4% method and
IC-DISC commission from the related
any subclassifications within a major product
the IC-DISC chooses to apply the special rule
supplier, is the amount actually charged, but
group) (see Schedule P (Form 1120-IC-DISC)
for transfer prices or commissions, check the
is subject to the arm’s length standard of
Codes for Principal Business Activity on page
box in line 22 and attach a separate
section 482. Do not complete Schedule P if
13 of the Instructions for Form
computation of the limitation on IC-DISC
the section 482 method is used.
1120-IC-DISC). The corporation may choose
taxable income determined under the special
Incomplete transactions. For the 50-50
a product grouping for one product and use
rule and enter the amount on line 22. Under
and 4% methods, if the related supplier sells
the transaction-by-transaction method for
the special rule, a transfer price or
property to the IC-DISC during the year but
another product within the same tax year.
commission will not be considered to cause a
the IC-DISC does not resell it during the year,
loss for a related supplier if the IC-DISC’s net
Generally, the computation of taxable
the related supplier’s transfer price to the
profit on the sale does not exceed the
income under the intercompany pricing rules
IC-DISC must equal the related supplier’s
will not be permitted to the extent that their
IC-DISC’s and related supplier’s net profit
cost of goods sold. Do not complete
application would result in a loss to the
percentage on all their sales of the product or
Schedule P for incomplete transactions. The
related supplier.
product line. See Regulations section
related supplier’s transfer price to the
1.994-1(e)(1)(ii) for details.
Each of the following methods may be
IC-DISC must be recomputed for the year in
applied for sales, leases, and services. See
Reporting Part II and Part III amounts on
which the IC-DISC resells the property and
the regulations under section 994.
Form 1120-IC-DISC. If the computed transfer
the transaction must then be reported on
price for sales, leases, or services (Part II) or
50-50 combined taxable income method.
Schedule P for that year.
IC-DISC commission (Part III) is entered on
The transfer price the related supplier charges
Part I, Section A—Combined Taxable
more than one line of Form 1120-IC-DISC,
the IC-DISC, or the related supplier’s IC-DISC
Income. Complete Section A-1 only if
attach an explanation indicating the portion of
commission, is the amount that lowers the
marginal costing is not used.
the total that is applied to each line.
taxable income the IC-DISC derives from the
Schedule P (Form 1120-IC-DISC) (Rev. 12-2008)
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