profit split method

Popular Terms
One of several methods employed by the IRS to determine the proper allocation of income and deductions among parties to an intercompany transaction where one party is comprised of controlled taxpayers and another consists of uncontrolled taxpayers. The profit split method is used to evaluate controlled transactions to determine if the allocation of profits and losses between the related parties were conducted at arm's length based on the relative value of their contributions to the profit or loss.

Email Print Embed