Clark Armitage Discusses Periodic Adjustments on IFA Webinar

The periodic adjustments (PA) rules have rarely been applied by the IRS in audits until recently. With the issuance of a GLAM on PAs, along with litigation against Meta and increased audit activity on the issue, PAs have moved from a theoretical to a very real transfer pricing risk, particularly for intangible transactions with uncertain future outcomes. This session explores the IRS's shifting interpretation of PAs as a mechanism for implementing the Commensurate With Income (CWI) standard, and will examine the tensions between prior guidance and current positions, including how the IRS is enforcing its current interpretation of the PA rules in the Meta case. Finally, we will discuss practical implications for taxpayers with respect to future enforcement of the PA rules and options for proactively managing this risk.

Learning objectives include:

• Understand the historical development of Section 482 and how the IRS’s interpretation of the PA rules have evolved, particularly through administrative guidance and litigation;
• Identify the legal and economic challenges with respect to the IRS's position in the 2025 GLAM; and
• Learn about the implications of the 2025 GLAM and the Meta case for transfer pricing of intangibles, including open questions with respect to application of the periodic adjustment rules.