A Chinese Furniture or Lighting Factory Selling to Its Own U.S. Company: Transfer Pricing, Customs Value and Section 1059A
Sales from a Chinese factory to its own U.S. company are related-party transactions. The IRS tests the price under §482, with 20% or 40% penalties on large adjustments; customs checks whether the relationship lowered the declared value; and IRC §1059A caps the purchase cost in inventory at the customs value. One documented price has to work for the IRS, CBP and China.
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