Baker McKenzie's North America Tax Practice Group has prepared a Tax News and Developments Client Alert on IRS Advance Pricing & Mutual Agreement Program's new "Functional Cost Diagnostic Model" (Model) released on March 1, 2019, which may require taxpayers to provide certain data to be used in a rudimentary residual profit split method calculation. We recommend that taxpayers in the APMA program or with transfer pricing issues under examination review and become familiar with the Model. The Client Alert provides background and an overview to the Model, analyzes an example provided by APMA, and offers insights on how this Model may impact taxpayers. At the end of the Alert is a link to download the Model and related materials.
Please do not hesitate to contact the indicated authors of the Alert or any member of our North America Tax Practice Group if you would like additional information or for further discussion of the issues addressed.