What kind of intercompany transactions needs to be eliminated at the end of year?

[Maria]

investment?

due to/due from?

notes payable and notes receivable?

what else?

[Bees Knees]

I'm not sure what you mean, needs to be eliminated. If you are talking balance sheet items, they stay there until the account is zeroed out, and possibly for a year or two after, just to make it clear they are zeroed out.

[outwest]

Some other Items..

Intercompany sales, reimbursements, and expenses.

Doug

[Maria]

When we consolidate the subsidiary, we need eliminate all of the intercompany transactions, such as investment, due from and payable.

Yes, sales need to.

[Snaggletooth]

Accounting

Maria, this appears to be an accounting-related question, with minimal tax consequences so long as all the subsidiaries are U.S. and you're filing a consolidated tax return.

The only snafu I can think of is on state taxes if the subsidiaries are in different states. Obviously by altering the transfer price you can increase your profits in a low-tax state like Louisiana and decrease your profits in a high-tax state like New York. I don't know whether the states have ganged up on this practice and created a sort of "transfer price convention" to prevent this or not.

Many of the states no longer isolate profit, but take the entire corporate profit and allocate it based on a "three-factor formula" or "four-factor formula." This makes transfer pricing a moot point.