International Finance and Accounting Handbook

(f ) Gross Revenues. Gross revenues means gross receipts in the nature of earning
gross income. Gross revenues are taken into account before taking returns or al-
lowances, and are taken into account before determining the cost of goods sold or op-
erating expenses. “Gross revenues” do not include borrowings, lendings, or the re-
ceipt of passive dividend income.
The above definition is taken from the definition of the gross revenues of an in-
dustry segment in Treasury Regulation Section 1.6038A-3(c)(7)(ii).

(g) Operating Income. Operating income is gross revenue minus all operating ex-
penses. The following items cannot be added to or subtracted from operating profit:

• Revenue earned at the corporate level and not derived from operations, such as
  passive income


• General corporate expenses, except as allocated and apportioned under Treasury
  Regulation Section 1.861 et seq.


• Interest expense


• Domestic and foreign income taxes

This definition of operating profit is taken from the definition of “operating profit of
industry segment” in Treasury Regulation Section 1.6038A-3(c)(7)(v).

(h) Operating Expenses. Operating expenses include all expenses of the segment,
except for the following expenses:

• General corporate expenses, except as allocated and apportioned under Section
  1.861 et seq.


• Interest expense


• Domestic and foreign income taxes

This definition of operating expenses is extracted from the term “operating expenses”
in Treasury Regulation Section 1.6038A-3(c)(7)(v) but is not further defined in that
section.

(i) General Information. A taxpayer is to provide the following information:

1. Indicate your taxpayer identification number.


2. Specify each acquisition initiated during the tax year under review.


3. Specify each acquisition in process during the tax year under review.


4. Specify each acquisition completed during the year under review.


5. Specify each acquisition initiated during the tax year under review that was
   subject to the Notification and Report Form, 16 C.F.R. Parts 801–803.


6. Specify each acquisition in process during the tax year under review that was
   subject to the Notification and Report Form, 16 C.F.R. Parts 801–803.


7. Specify each acquisition completed during the tax year under review that was
   subject to the Notification and Report Form, 16 C.F.R. Parts 801–803.


8. Indicate the intended tax treatment of each 16 C.F.R. Part 801–803 transac-
   tion completed during the year of issue.

29.22 PROPOSED SECOND STANDARD TRANSFER PRICING 29 • 39