A Chinese Factory Selling to Its Own U.S. Company to Supply Wayfair: Setting the Price, Form 5472 and Why Customs Value Must Match
When a Chinese factory supplies Wayfair through a U.S. subsidiary, the subsidiary's purchase price from the factory decides where profit is taxed. It must be arm's length under IRC §482 and reported on Form 5472, and under §1059A the inventory cost for income tax can't exceed the customs value. With a worked $2,000,000 example.
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