John Warner, shareholder in the firm's Tax section, is quoted in a Law360 article, "Gov'ts May Question Losses By Cos. Set Up As Low-Risk" about what companies with transfer pricing structures should do if revenue agencies scrutinize their pandemic-related losses.
By the same token, companies shouldn't attempt to change the transfer pricing method they've used for years to one that would allow the low-risk entity to share in the group's overall loss, according to John Warner of Buchanan Ingersoll & Rooney PC.
The comparable profits method, which calculates a company's income based on the profitability of similar, unrelated companies, is commonly used to set the return for a low-risk entity. If a company has been using that method, "it wouldn't be kosher to switch to some sort of profit split, which would be a loss split," he told Law360.
"Your story really ought to be consistent throughout various aspects of the business cycle," Warner said.