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Economic Substance Principle Gains Traction in IRS Audits

January 1, 2025
Economic Substance Principle Gains Traction in IRS Audits

Economic Substance Principle Gains Traction in IRS Audits

IRS auditors are applying the economic substance doctrine more widely in transfer pricing reviews. Intercompany transactions must now clearly demonstrate a real business purpose, not just a tax benefit, or risk substantial penalties during IRS audits.

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