(a) The department will, in its discretion, adjust the transfer price of any goods or services transferred to or from a water's edge combined group corporation and an affiliate not in the water's edge combined group as follows:
- (1) if the transferor corporation had more than 10 percent of its transfers during the tax year to nonaffiliated corporations, the department will, in its discretion, use the average price at which the goods or services were sold to nonaffiliated corporations; and
- (2) if the transferor corporation had 10 percent or less of its transfers during the tax year to nonaffiliated corporations, the department will, in its discretion, require that the net income attributable to the transfers be apportioned to the transferor and the transferee based on book inventory costs.
- (b) If the department determines that a transfer between affiliated corporations was intended to decrease or increase a corporation's factors, the department will, in its discretion, attribute the sales, property, or payroll of the corporation to the affiliated corporation which, if not for the transfer, would have reported the factors.
- (c) Nothing in this section precludes adjustments by the department under Internal Revenue Code section 482 (26 U.S.C. 482) or AS 43.19.010, Article IV, sec. 18.
(Eff. 7/9/93, Register 127; am 3/6/98, Register 145)