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Business Accouting on Taxation: Transfer Pricing

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In a multi-state business where the firms sell products to other firms for the same price, how can transfer pricing be best structured in order to minimize state income taxes?

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Solution Summary

Your tutorial is 143 words plus two references and gives a simple example to illustrate how this works.

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If you are selling to a related party or to divisions within the same firm, you can use transfer pricing to create profits in the lowest tax rate state and reduce or eliminate profits in the higher tax rate states. For example:

New York: 9% ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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