Comparable profits method
Comparable profits method(1) In general. The comparable profits method evaluates whether the amount charged in a controlled transaction is arm's length, based on objective measures of profitability (profit level indicators) derived from uncontrolled taxpayers that engage in similar business activities under similar circumstances. The rules in 1.4825 relating to the comparable profits method apply to controlled services transactions, except as modified in this paragraph (f).
(1)In general.The comparable profits method evaluates whether the amount charged in a controlled transaction is arm's length, based on objective measures of profitability (profit level indicators) derived from uncontrolled taxpayers that engage in similar business activities under similar circumstances. The rules in 1.4825 relating to the comparable profits method apply to controlled services transactions, except as modified in this paragraph (f).