What is IRC 482 transfer pricing and can the IRS reallocate income between my foreign company and my U.S. LLC?
I own a software company in Ireland and a separate LLC in Delaware. My Irish company licenses software to the U.S. LLC, which sells it to U.S. customers. My CPA warned me about IRC 482 'transfer pricing' rules and said the IRS could reallocate income between my two entities if the licensing fee isn't at 'arm's length.' What does this mean? How does the IRS decide what's arm's length? And what happens if they disagree with my pricing?
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