Fillable Schedule P (Form 1120-Fsc) - Transfer Price Or Commission (Page 3 of 3) in pdf

Schedule P (Form 1120-FSC) (Rev. 9-2017)

Page

Format of tabular schedules. If a

supplier’s cost of goods sold, and the

same controlled group and the related

supplier) for any other sale, or group of

tabular schedule is attached to Schedule

supplier’s and the FSC’s

P, the schedule must:

noninventoriable costs that relate to the

sales, during the tax year that falls within

foreign trading gross receipts. See

the same NAICS code (or, if applicable,

• Be in spreadsheet or similar format;

Regulations section 1.471-11(c)(2)(ii).

SIC code) as the subject sale.

• List the taxpayer’s name and EIN on

Also see Temporary Regulations section

Section B—23% of Combined

each numbered page;

1.925(a)-1T(c)(6)(iii) for special rules

Taxable Income Method

regarding gross receipts and total costs.

• Be formatted in columns that

Under this method, the related supplier

correspond to items A, C, and each line

Line 2b. Include an apportionment of

figures an allowable transfer price to

item in Parts I, II, and III of Schedule P;

deductions that are not definitely

charge the FSC (or an allowable

and

allocable, such as interest expense and

commission to pay to the FSC) so that

stewardship expenses. See Temporary

• Show totals in each column.

the FSC will profit on the sale.

Regulations sections 1.861-11T(f) and

Item C—Principal Business Activity

1.861-14T(f) for details on the

The profit is limited to 23% of the

Code. If applicable, use the list of

apportionment.

FSC’s and the supplier’s combined

Principal Business Activity codes on the

taxable income attributable to the foreign

Marginal Costing

last page of the Instructions for Form

trading gross receipts from the sale. Also

1120-FSC to group activities. Enter the

Under the marginal costing rules, the

see item 3 (regarding incomplete

six-digit number that relates to the

combined taxable income of the FSC

transactions) under When Not To File on

corresponding product or product line

and its related supplier is figured by

page 2.

reported in item A.

subtracting from foreign trading gross

Section C—1.83% of Foreign

receipts the direct material and direct

Note: If the FSC used the SIC codes for

Trading Gross Receipts Method

labor costs of producing a particular

Schedule P in prior tax years, it may

item, product, or product line. See

continue using the SIC codes for the

Under this method, the related supplier

Regulations section 1.471-11(b)(2)(ii).

current tax year.

figures an allowable transfer price to

The combined taxable income also may

charge the FSC (or an allowable

Part I

be limited to the overall profit percentage

commission to pay to the FSC) so that

(line 10) multiplied by the line 4 foreign

the FSC will profit on the sale.

Section A—Combined Taxable

trading gross receipts.

Income

The profit is limited to 1.83% of the

See Temporary Regulations section

FSC’s foreign trading gross receipts. It is

Under the administrative pricing rules,

1.925(b)-1T for more information on the

further limited to twice the profit

the methods discussed below may be

marginal costing rules. Also see section

determined under either (a) the 23% of

used in the same tax year of the FSC for

1.925(a)-1T for information on the

combined taxable income method, or

separate transactions (or separate

transfer pricing rules.

(b) the marginal costing rules (described

groups of transactions).

Limit on FSC Income (No-Loss Rules)

above). Also see item 3 (regarding

Full Costing

incomplete transactions) under When

If there is a combined loss on a

Not To File on page 2.

Foreign trading gross receipts are the

transaction or group of transactions, the

gross receipts of an FSC (other than a

FSC may not earn a profit under either

Part II

small FSC) that has met the foreign

the 23% method or the 1.83% method.

management and foreign economic

Under the 1.83% method, the FSC’s

Line 20. If the transfer price from the

process rules. The receipts must be from

profit on line 17 may not exceed the full

related supplier to the FSC is entered on

the sale, lease, or rental of export

costing combined taxable income

more than one line on Form 1120-FSC,

property for use outside the United

reported on line 3. The related supplier

attach an explanation indicating the

States or for engineering or architectural

may, however, set a transfer price or

portion of line 20 that applies to each

services for a construction project

rental payment or pay a commission in

line.

located outside the United States. For

an amount that will enable the FSC to

Part III

details, see section 924 and Foreign

recover its costs, if any, even if the result

Trading Gross Receipts in the

is a loss for the related supplier.

Line 23. If the FSC commission from the

Instructions for Form 1120-FSC.

If the FSC recognizes income while

related supplier is entered on more than

If the FSC is the principal in the sale of

the related supplier recognizes a loss on

one line on Form 1120-FSC, attach an

export property, the combined taxable

a sale under the section 482 method,

explanation indicating the portion of line

income of the FSC and its related

neither the 23% method nor the 1.83%

23 that applies to each line.

supplier is the excess of the FSC’s

method may be used by the FSC and the

foreign trading gross receipts from the

related supplier (or by an FSC in the

sale over the total costs of the FSC and

related supplier. These costs include the

Schedule P (Form 1120-Fsc) - Transfer Price Or Commission Page 3

Related Articles

Related forms

Related Categories