Asked in Business Law, Tax Law and Securities Law

Q: Does US law specify a minimum gross margin on "related party" transactions?

Does US tax laws / Corporate law mention a specific minimum gross margin that should be maintained by a US company while trading with its related party abroad?

Or,does it ask to ensure that the price at which it sells to its related party abroad is not lesser than the price at which it sells to its "NON related party", abroad

1 Lawyer Answer
Eric  Day
Eric Day
Answered
  • Tax Law Lawyer
  • Henderson, NV

A: when you sell a piece of property to a related party cheaper, the IRS may make the property ordinary again to the u.s. company/individual. Also, you cannot sell the property to a related property and claim a loss on the sale.

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