Bulletin No. 2003-44 November 3, 2003

REG–146893–02 and REG–115037–00, page 967. Proposed regulations under section 482 of the Code explain that when controlled taxpayers transfer goods, services, intangibles or other items of value, the amount charged must be consistent with the amount charged at armÊs length in the same or comparable transactions. These regulations provide updated guidance on determining the armÊs length charge where one controlled taxpayer performs services that benefit one or more other controlled taxpayers. These regulations also provide updated guidance on the allocation among controlled taxpayers of income from intangibles, in particular when one controlled taxpayer performs activities that increase (or are expected to increase) the value of an intangible owned by another controlled taxpayer. A public hearing is scheduled for January 14, 2004.

Rev. Proc. 2003–77, page 964. Penalties; substantial understatement. Guidance is provided concerning when information shown on a return in accordance with the applicable forms and instructions will be adequate disclosure for purposes of reducing an understatement of income tax under sections 6662(d) and 6694(a) of the Code.