If the IRS Didn't Keep a Good Watch on Transfer

Multiple Choice

If the IRS didn't keep a good watch on transfer pricing, international transfer pricing could lead to loss of corporate profits taxes in the US are much higher than the Cayman Islands. If a firm owns a Cayman Island distributorship, it can buy US products and resell them from the Cayman Islands. To minimize firm-wide corporate taxation (and if it were not required to use arm's length pricing) , then:

A) Use a high transfer price to sell products to the Cayman Island to minimize US taxes.
B) Use a low transfer price to sell products to the Cayman Island to minimize US taxes.
C) It will not matter what transfer price it uses to minimize US taxes.