KW Economics prepares rebuttal analysis for tax and transfer pricing dispute matters involving businesses in Maryland: the controlled transactions and prices at issue, the records and comparables that test them, and a report written for the forum that decides the dispute. Either side.
An opposing transfer pricing report is tested on the choices that drive its result: whether the delineation of the transactions matches the agreements and the companies' conduct, the functional analysis, the method selected and the reasons the alternatives were rejected, the tested party and the profit level indicator, the comparables screens and the companies they admitted or excluded, the adjustments, the years of data, and the point in the range. The economist rebuilds each step from the report's own workpapers and data where they are produced, recalculates the result under corrected choices one at a time and together, and ranks each finding by its effect, so counsel can see which choices carry the number and the tribunal can weigh the two analyses on the record.
Critique of an opposing economic damages, valuation, or forensic accounting report for plaintiff or defense counsel. The review tests the assumptions, data sources, discount rates, worklife and life expectancy inputs, growth rates, mitigation treatment, and arithmetic behind the opposing number, identifies the errors that matter, and quantifies how the conclusion changes when they are corrected. The result supports cross-examination, a rebuttal report, or a motion directed at the reliability of the opinion.
The result usually turns on a few choices: the method, and whether a comparable price or a profit-based method is the more reliable on the facts; the tested party, and whether it is truly the simpler participant; the comparables and the screens that admitted or excluded them; the profit level indicator; the years of data; and the point within the range the forum uses. For intangibles, who owns them, who performed the functions that created their value, and whether the royalty base and terms match the comparables move the result most. Penalty exposure in a federal case depends on whether the documentation that existed when the return was filed supported a reasonable method, a separate question from whether the price was arm's length, and in commercial, shareholder, and divorce cases the restated profit carries into a damages claim or a valuation, where the governing contract or duty decides how it is used.
Federal tax forums test expert testimony under the federal rules of evidence, which the Tax Court applies by statute: whether the expert is qualified, whether the testimony rests on sufficient facts or data and on reliable methods, and whether those methods were reliably applied to the facts of the case. The commercial, shareholder, and matrimonial claims heard in Maryland's courts are tested under its own standard, and a state tax appeal follows the rules of the forum that hears it. Maryland courts now apply a reliability inquiry to all expert testimony: the trial judge asks whether the economist is qualified, whether the method is one the profession has tested and accepted, and whether it was reliably applied to the facts of the case. A transfer pricing report meets each of these inquiries by stating every method choice and naming the data behind every comparable.
Highest court: Supreme Court of Maryland. Court system: courts.state.md.us.
Federal venues: District of Maryland.
A federal transfer pricing dispute applies the same statute and regulations wherever the business is based, but where it is based decides which appellate decisions govern: an appeal from the Tax Court ordinarily goes to the federal court of appeals for the circuit where a corporation has its principal place of business (for a business based in Maryland, the Fourth Circuit), whose precedent the Tax Court follows, and a refund suit is filed in the federal district where the business is based or in the Court of Federal Claims. Whether Maryland reallocates income between related companies under its own tax, requires royalties or interest paid to an affiliate to be added back, or combines affiliates in one return, and whether a commercial, shareholder, or matrimonial claim in Maryland adopts an arm's length benchmark, are questions counsel confirms; the report presents the analysis so it can be applied under either party's position.
We issue a rebuttal report where one is disclosed and provide deposition and trial testimony, cross-examination outlines, and support for motions directed at the opinion.
An opposing transfer pricing report is tested on the choices that drive its result: whether the delineation of the transactions matches the agreements and the companies' conduct, the functional analysis, the method selected and the reasons the alternatives were rejected, the tested party and the profit level indicator, the comparables screens and the companies they admitted or excluded, the adjustments, the years of data, and the point in the range. The economist rebuilds each step from the report's own workpapers and data where they are produced, recalculates the result under corrected choices one at a time and together, and ranks each finding by its effect, so counsel can see which choices carry the number and the tribunal can weigh the two analyses on the record.
Federal tax forums test expert testimony under the federal rules of evidence, which the Tax Court applies by statute: whether the expert is qualified, whether the testimony rests on sufficient facts or data and on reliable methods, and whether those methods were reliably applied to the facts of the case. The commercial, shareholder, and matrimonial claims heard in Maryland's courts are tested under its own standard, and a state tax appeal follows the rules of the forum that hears it. Maryland courts now apply a reliability inquiry to all expert testimony: the trial judge asks whether the economist is qualified, whether the method is one the profession has tested and accepted, and whether it was reliably applied to the facts of the case. A transfer pricing report meets each of these inquiries by stating every method choice and naming the data behind every comparable. Federal income tax disputes over related-party prices are heard in the United States Tax Court or, on a refund claim, in a federal district court or the Court of Federal Claims; appeals from the Tax Court and the district courts ordinarily go to the federal court of appeals for the circuit where the business is based, and appeals from the Court of Federal Claims to the Federal Circuit. A dispute over Maryland's own tax follows its administrative and appeal process. Commercial and shareholder claims in Maryland that turn on an intercompany price are heard in the Circuit Court (General jurisdiction; larger civil cases, felonies, equity, domestic relations), with final appeals to the Supreme Court of Maryland, and a divorce in which one bears on income or the value of a business is heard in the court that hears divorce in Maryland. Matters within federal jurisdiction proceed in the District of Maryland.
A federal transfer pricing dispute applies the same statute and regulations wherever the business is based, but where it is based decides which appellate decisions govern: an appeal from the Tax Court ordinarily goes to the federal court of appeals for the circuit where a corporation has its principal place of business (for a business based in Maryland, the Fourth Circuit), whose precedent the Tax Court follows, and a refund suit is filed in the federal district where the business is based or in the Court of Federal Claims. Whether Maryland reallocates income between related companies under its own tax, requires royalties or interest paid to an affiliate to be added back, or combines affiliates in one return, and whether a commercial, shareholder, or matrimonial claim in Maryland adopts an arm's length benchmark, are questions counsel confirms; the report presents the analysis so it can be applied under either party's position. The report states each transaction, method choice, and comparable screen with its source and shows the result under the opposing method, tested party, and comparables, so counsel can apply the rule of decision of the forum that hears the dispute to a documented result.
Request a consultation on Rebuttal or call (201) 343-0700. Plaintiff and defense counsel.