Choice "C" is correct. Transfer pricing issues exist when a U.S.-based taxpayer shares costs with an affiliate that either (i) is not subject to the U.S. income tax or (ii) does not file a consolidated income tax return with the U.S.-based taxpayer.Choice "b" is incorrect. Transfer pricing issues arise when a U.S.-based taxpayer transfers, sells, purchases, or leases tangible property or intangible property to or from an affiliate that either (i) is not subject to U.S. income tax; or (ii) does not file a consolidated income tax return with the U.S.-based taxpayer.Choice "a" is incorrect. Transfer pricing issues arise when a U.S.-based taxpayer enters into loan agreements or service contracts with an affiliate that either (i) is not subject to U.S. income tax; or (ii) does not file a consolidated income tax return with the U.S.-based taxpayer.Choice "d" is incorrect. Transfer pricing issues arise when a U.S.-based taxpayer transfers, sells, purchases, or leases tangible property or intangible property to or from an affiliate that either (i) is not subject to U.S. income tax; or (ii) does not file a consolidated income tax return with the U.S.-based taxpayer.
