Holdings is a portfolio company of New York based private equity fund Kinderhook Industries LLC.
QCSAs' "maintenance." After a QCSA has been recognized under the CSRs, MNEs are still subject to ongoing documentation (99) and auditing requirements with regard to their QCSAs.
The buy-in/buy-out provisions regulate how controlled participants may enter or exit QCSAs. According to the buy-in/buy-out provisions, entries and exits to an existing QCSA by other affiliated parties are permitted so long as entering or exiting companies provide compensation or get reimbursed, respectively, for the market value of their shares in the intangible asset's development endeavor.
tax implication, the Service will tax the QCSA according to its actual benefits.
By the virtue of their electability, the CSRs lure taxpayers with incentives to invest initial resources necessary to enter the QCSA in order to reduce their future tax auditing and tax adjustment exposures under post-1986 section 482.
Holding all factors except compliance costs constant, rational taxpayers would incur the initial costs of entering a QCSA if their future compliance burdens are guaranteed to be significantly reduced.
* Through the use of reasonable methods of allocation similar to those upon which QCSAs
and CCAs rely, each participant should be responsible for a share of the overall pool of centralized services charges in proportion to the participant's anticipated share of benefits received from the arrangement.
1.482-7(a)(1) clarifies that a QCSA will not be treated as a partnership, nor will a foreign participant be treated as engaged in a trade or business within the U.S., solely by virture of its participation in a QCSA.
However, use of a QCSA does not eliminate all transfer pricing issues; in effect, it substitutes one set of issues for another.
1.482-7(a)(1) and (2) indicate that if a CSA is not a QCSA, the IRS may disregard it.
Consequently, it is rather easy for two uncontrolled participants to enter into a QCSA - they must comply only with the contemporaneous documentation requirements contained in Regs.
1.482-7(j)(3) provides that a controlled participant must attach to its Federal income tax return a statement indicating that it is a participant in a QCSA and list other controlled participants to the arrangement.