Rev. Rul. 82-80

Rev. Rul. 82-80

A United States subsidiary, whose taxable income has been increased for a tax year because of an allocation under section 482 of the Internal Revenue Code, may receive payment from its foreign parent corporation from which, or to which, the allocation of income or deductions was made, in an amount not in excess of the taxable income increase without further federal income tax consequences. For procedures to be followed in applying this position and requirements that must be fulfilled to qualify for such treatment, see Rev. Proc. 65-17, 1965-1 C.B. 833.

Further, if Rev. Proc. 65-17 treatment is granted, the original transaction will be treated, for tax purposes, as if the correct amount, as determined under section 482 of the Code, was paid. For example, if a United States subsidiary pays more than arm's-length consideration for services performed by its foreign parent corporation, the parent corporation will not be considered to have received a dividend to the extent of the greater-than-arm's-length amount, and the withholding tax provisions of sections 881 and 1442 will not be applied.