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Law360 Quotes Elizabeth Stevens on Governments Questioning Losses

May 1, 2020, Law360

With businesses closing or limiting operations due to a pandemic, companies with transfer pricing structures designed to limit risk — and income — to some group members should prepare for revenue agencies to scrutinize losses to those entities.

. . .

Much of what companies are suffering now is a result of government actions to protect the public during the health crisis, whereas the events of 2008 and 2009 were driven by the market. That may lead tax authorities to be more open to losses resulting from the pandemic, said Elizabeth Stevens, a Member of Caplin & Drysdale.

"A lot of companies can't do the things they need to do to generate revenue because the government has ordered them not to," Stevens told Law360. "If you can point to government policy in a location as exaggerating the losses or the economic consequences … you have a better argument for saying the risk is borne locally."

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