The U.S.Internal revenue service requires subsidiaries set transfer prices by charging prices that an unrelated buyer and seller would willingly pay or using:
A) Minimal cost pricing
B) Marginal cost pricing
C) Arm's-length pricing
D) Deposit pricing

Question

Quizplus · Accepted Answer

The U.S. Internal Revenue Service requires subsidiaries to use arm's-length pricing when setting transfer prices. This means that they must charge prices that an unrelated buyer and seller would willingly pay, ensuring fairness and avoiding tax evasion through inflated or deflated prices. Minimal cost pricing and marginal cost pricing are not relevant to transfer pricing, and deposit pricing is not a commonly used pricing method in this context.

The USInternal Revenue Service Requires Subsidiaries Set Transfer Prices by Charging