SCHEDULE P                            Intercompany Transfer Price or Commission
(Form 1120-IC-DISC)                   Attach a separate schedule for each transaction or group of transactions to  
(Rev. September 2017)               which the intercompany pricing rules under section 994(a)(1) and (2) are applied.
                                                                                                                                                   OMB No. 1545-0123
                                        ©  Go to www.irs.gov/Form1120ICDISC for the latest information.
Department of the Treasury  For the calendar year 20   , or fiscal year beginning              , 20           , and ending        , 20
Internal Revenue Service    For amount reported on line                             , Schedule                      , Form 1120-IC-DISC
Name as shown on Form 1120-IC-DISC                                                                                           Employer identification number

Identify product or product line reported on this schedule. Also, enter the Principal Business Activity code                 This schedule is for a (check one):
number, if used. See instructions.
                                                                                                                             Single transaction  .  . . .       . .
                                                                                                                             Group of transactions  . . .       . .
Part I IC-DISC Taxable Income
SECTION A—Combined Taxable Income
                                      Section A-1—If marginal costing is not used
1  Gross receipts from transaction between IC-DISC (or related supplier) and third party                                   . . . .  .              1
2  Less costs and expenses allocable to gross receipts from transaction:
a  Cost of goods sold from property if sold, or depreciation from property if leased                                2a
b  Related supplier’s expenses allocable to gross receipts from transaction  .                                . .   2b
c  IC-DISC export promotion expenses allocable to gross receipts from transaction                                   2c
d  Other IC-DISC expenses allocable to gross receipts from transaction  .                        .            . .   2d
e  Add lines 2a through 2d  .           .  . .       .  . . . .                 . . . . . .    . .            . . . .      . . . .  .  2e
3  Combined taxable income. Subtract line 2e from line 1. If a loss, enter -0-  .                               . . .      . . . .  .              3
                                        Section A-2—If marginal costing is used
4  Gross receipts from resale by IC-DISC (or sale by related supplier) to third party                             . .      . . . .  .              4
5  Costs and expenses allocable to gross receipts from sale:
a  Cost of direct material from property sold  .            . .                 . . . . . .    . .            . .   5a
b  Cost of direct labor from property sold  .             . . .                 . . . . . .    . .            . .   5b
c  IC-DISC  export  promotion  expenses  allocable  to  gross  receipts  from  sales  that 
   are claimed as promotional  .           . .       .  . . . .                 . . . . . .    . .            . .   5c
d  Add lines 5a through 5c  .           .  . .       .  . . . .                 . . . . . .    . .            . . . .      . . . .  .  5d
6  Combined taxable income or (loss) before application of overall profit percentage limitation. Subtract 
   line 5d from line 4. If a loss, skip lines 7 through 11 and enter -0- on line 12  .                          . . .      . . . .  .              6
7  Gross receipts of related supplier and IC-DISC (or controlled group) from all foreign and domestic sales 
   of the product or product line  .         .       .  . . . .                 . . . . . .    . .            . . . .      . . . .  .              7
8  Costs and expenses of related supplier and IC-DISC (or controlled group) allocable to gross income
   from such sales:
a  Cost of goods sold from property sold  .               . . .                 . . . . . .    . .            . .   8a
b  Expenses allocable to gross receipts from such sales   .                         . . . .    . .            . .   8b
c  Add lines 8a and 8b  .             . .  . .       .  . . . .                 . . . . . .    . .            . . . .      . . . .  .  8c
9  Subtract line 8c from line 7. If a loss, skip lines 10 and 11 and enter -0- on line 12  .                        .      . . . .  .              9
10 Overall  profit  percentage.  Divide  line  9  by  line  7.  Check  if  controlled  group  optional  method
   is used . .           .  .     . . . .  . .       .  . . . .                 . . . . . .    . .            . . . .      . . .  ▶    10                           % 
11 Overall profit percentage limitation. Multiply line 4 by line 10  .                  . .    . .            . . . .      . . . .  .  11
12 Combined taxable income. Enter the smaller of line 6 or line 11                        .    . .            . . . .      . . . .  .  12
SECTION B—50-50 Combined Taxable Income Method  (Must be used if marginal costing is used. See instructions.)
13 Combined taxable income. Enter amount from line 3 or line 12  .                        .    . .            . . . .      . . . .  .  13
14 Multiply line 13 by 50% (0.50)  .         .       .  . . . .                 . . . . . .    . .            . . . .      . . . .  .  14
15 Enter 10% (0.10) of IC-DISC export promotion expenses allocable to gross income from transactions
   that are claimed as export promotion .               . . . .                 . . . . . .    . .            . . . .      . . . .  .  15
16 Add lines 14 and 15  .             . .  . .       .  . . . .                 . . . . . .    . .            . . . .      . . . .  .  16
17 IC-DISC taxable income. Enter the smaller of line 13 or line 16  .                     .    . .            . . . .      . . . .  .  17
SECTION C—4% Gross Receipts Method (Cannot be used if marginal costing is used.)
18 Gross receipts from transaction. Enter amount from line 1  .                       . . .    . .            . . . .      . . . .  .  18
19 Multiply line 18 by 4% (0.04)           . .       .  . . . .                 . . . . . .    . .            . . . .      . . . .  .  19
20 Multiply line 2c by 10% (0.10)  .         .       .  . . . .                 . . . . . .    . .            . . . .      . . . .  .  20
21 Add lines 19 and 20  .             . .  . .       .  . . . .                 . . . . . .    . .            . . . .      . . . .  .  21
22 Combined taxable income. Enter amount from line 3 or amount computed under special rule. If special
   rule is applied, check here      . See instructions        .                 . . . . . .    . .            . . . .      . . . .  .  22
23 IC-DISC taxable income. Enter the smaller of line 21 or line 22  .                     .    . .            . . . .      . . . .  .  23
For Paperwork Reduction Act Notice, see the Instructions for Form 1120-IC-DISC.         Cat. No. 11478S                      Schedule P (Form 1120-IC-DISC) (Rev. 9-2017)

Schedule P (Form 1120-IC-DISC) (Rev. 9-2017)                                                                                                         Page 2
Part II      Transfer Price From Related Supplier to IC-DISC (See instructions.)
24      Gross receipts from transaction. Enter amount from line 1 or line 4, Part I .            .     . . . .   .   .  .   .        24 
25      Less reductions:
    a   IC-DISC taxable income (but not to exceed amount determined in Part I)  .                .     .   25a
    b   IC-DISC export promotion expenses allocable to gross income from transaction  .                    25b
    c   Other IC-DISC expenses allocable to gross income from transaction  .                 .   .     .   25c
    d   Add lines 25a through 25c  .          .  . . .   .   .  .  .  .   .    .  .   . .    .   .     . . . .   .   .  .   .     25d
26      Transfer price from related supplier to IC-DISC. Subtract line 25d from line 24  .                 . .   .   .  .   .        26 
Part III     IC-DISC Commission From Related Supplier (See instructions.)
27      IC-DISC taxable income (but not to exceed amount determined in Part I)  .                .     . . . .   .   .  .   .        27 
28      IC-DISC export promotion expenses allocable to gross receipts from transaction  .                  . .   .   .  .   .        28 
29      Other IC-DISC expenses allocable to gross receipts from transaction  .               .   .     . . . .   .   .  .   .        29 
30      IC-DISC commission from related supplier. Add lines 27 through 29                    .   .     . . . .   .   .  .   .        30 
                                                     transaction to an amount that is no more than           For purposes of line 2d, be sure to include 
Instructions                                         the sum of (1) 50% (0.50) of the IC-DISC’s            the appropriate apportionment of deductions 
Section references are to the Internal Revenue       and related supplier’s combined taxable               that are not directly allocable such as interest 
Code unless otherwise noted.                         income attributable to the qualified export           expenses and stewardship expenses. See 
Purpose of schedule. Use Schedule P to               receipts from the transaction and (2) 10%             Temporary Regulations sections 1.861-11T(f) 
show the computation of taxable income used          (0.10) of the IC-DISC’s export promotion              and 1.861-14T(f) for an explanation of 
in computing (1) the transfer price from a           expenses (as defined in Regulations section           appropriate apportionment.
related supplier to an IC-DISC (Part II), or (2)     1.994-1(f)) attributable to the qualified export        Complete Section A-2 if marginal costing is 
the IC-DISC commission from a related                receipts. Do not include in combined taxable          used. The marginal costing rules may be used 
supplier (Part III).                                 income (line 13) the discount amount reflected        only for sales, or commissions on sales, of 
                                                     in receivables (on the sale of export property)       property if the 50-50 method is used.
Complete and attach a separate                       that a related supplier transferred to the       
Schedule P to Form 1120-IC-DISC for each             IC-DISC. See Regulations sections                       Marginal costing cannot be used for          
transaction or group of transactions to which        1.994-1(c)(3) and (6)(v).                             (1) leasing of property; (2) performance of 
the intercompany pricing rules of sections                                                                 services; or (3) sales of export property that 
994(a)(1) and (2) are applied.                       If marginal costing rules apply, see Part I,          (in the hands of a purchaser related under 
                                                     Section A instructions below. 
IC-DISC taxable income. Generally, the                                                                     section 954(d)(3) to the seller) give rise to 
intercompany pricing determinations are to be        4% gross receipts method. The transfer                foreign base company sales income as 
made on a transaction-by-transaction basis.          price charged by the related supplier to the          described in section 954(d) unless, for the 
However, the IC-DISC may make an annual              IC-DISC or IC-DISC commission from the                purchaser’s year in which it resells the 
election to determine intercompany pricing on        related supplier is the amount that ensures           property, section 954(b)(3)(A) applies or the 
the basis of groups consisting of products or        that the taxable income derived by the                income is under the exceptions in section 
product lines. If the group basis is elected,        IC-DISC from the transaction does not                 954(b)(4).
then all transactions for that product or            exceed the sum of (1) 4% (0.04) of the                  Line 10. The overall profit percentage may 
product line must be grouped. Each group is          qualified export receipts of the IC-DISC              be computed under an optional method. See 
limited to one type of transaction (for              derived from the transaction and (2) 10%              Regulations section 1.994-2(c)(2) for details.
example, sales, leases, or commissions).             (0.10) of the export promotion expenses (as 
                                                     defined in Regulations section 1.994-1(f)) of         Part I, Section B and Section C. Complete 
A product or product line determination will         the IC-DISC attributable to the qualified             Section B or Section C.  If marginal costing is 
be accepted if it conforms to either of the          export receipts.                                      used, you must complete Section B.
following standards: (1) a recognized industry                                                               Line 22. If IC-DISC taxable income on a 
or trade usage, or (2) major product groups          Section 482 method. The transfer price the 
(or any subclassifications within a major            related supplier charged the IC-DISC, or              sale is computed under the 4% method and 
product group) (see  Schedule P (Form 1120-          IC-DISC commission from the related                   the IC-DISC chooses to apply the special rule 
IC-DISC) Codes for Principal Business Activity       supplier, is the amount actually charged, but         for transfer prices or commissions, check the 
in the Instructions for Form 1120-IC-DISC).          is subject to the arm’s length standard of            box in line 22 and attach a separate 
The corporation may choose a product                 section 482. Do not complete Schedule P if            statement showing the computation of the 
grouping for one product and use the                 the section 482 method is used.                       limitation on IC-DISC taxable income 
                                                                                                           determined under the special rule and enter 
transaction-by-transaction method for                Incomplete transactions. For the 50-50                the amount on line 22. Under the special rule, 
another product within the same tax year.            and 4% methods, if the related supplier sells         a transfer price or commission will not be 
Generally, the computation of taxable                property to the IC-DISC during the year but           considered to cause a loss for a related 
income under the intercompany pricing rules          the IC-DISC does not resell it during the year,       supplier if the IC-DISC’s net profit on the sale 
will not be permitted to the extent that their       the related supplier’s transfer price to the          does not exceed the IC-DISC’s and related 
application would result in a loss to the            IC-DISC must equal the related supplier’s             supplier’s net profit percentage on all their 
related supplier.                                    cost of goods sold. Do not complete                   sales of the product or product line. See 
                                                     Schedule P for incomplete transactions. The           Regulations section 1.994-1(e)(1)(ii) for details.
Each of the following methods may be                 related supplier’s transfer price to the          
applied for sales, leases, and services. See         IC-DISC must be recomputed for the year in            Reporting Part II and Part III amounts on 
the regulations under section 994.                   which the IC-DISC resells the property and            Form 1120-IC-DISC.  If the computed 
50-50 combined taxable income method.                the transaction must then be reported on              transfer price for sales, leases, or services 
The transfer price the related supplier charges      Schedule P for that year.                             (Part II) or IC-DISC commission (Part III) is 
                                                                                                           entered on more than one line of Form    
the IC-DISC, or the related supplier’s IC-DISC       Part I, Section A—Combined Taxable                    1120-IC-DISC, attach an explanation 
commission, is the amount that lowers the            Income. Complete Section A-1 only if                  indicating the portion of the total that is 
taxable income the IC-DISC derives from the          marginal costing is not used.                         applied to each line.

                                                                                                         Schedule P (Form 1120-IC-DISC) (Rev. 9-2017)