[Code of Federal Regulations]
[Title 26, Volume 18, Parts 500 to 599]
[Revised as of April 1, 2000]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR521.106]

[Page 149]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY 
                               (Continued)
 
PART 521--DENMARK--Table of Contents
 
                       Subpart--General Income Tax
 
Sec. 521.106  Control of a domestic enterprise by a Danish enterprise.

    Article IV of the convention provides, in effect, that if a Danish 
corporation by reason of its control of a domestic enterprise imposes on 
such later enterprise conditions different from those which would result 
from normal business relations between independent enterprises, the 
accounts between the enterprises may be adjusted so as to ascertain the 
true net income of each enterprise. The purpose is to place the 
controlled domestic enterprise on a tax parity with an uncontrolled 
domestic enterprise by determining, according to the standard of an 
uncontrolled enterprise, the true net income from the property and 
business of the controlled enterprise. The basic objective of the 
article is that if the accounting records do not truly reflect the net 
income from the property and business of such domestic enterprise the 
Commissioner of Internal Revenue may intervene and, by making such 
distributions, apportionments, or allocations as he may deem necessary 
of gross income or deductions of any item or element affecting net 
income as between such domestic enterprise and the Danish enterprise by 
which it is controlled or directed, determine the true net income of the 
domestic enterprise. The provisions of Sec. 29.45-1 of Regulations 111 
(26 CFR 1949 ed. Supps. 29.45-1) [and Sec. 39.45-1 of Regulations 118 
(26 CFR, Rev. 1953, Parts 1-79, and Supps.)] shall, insofar as 
applicable, be followed in the determination of the net income of the 
domestic business.