does the irs need to know about related party transactions 
the internal revenue service irs examines related party transactions for any conflicts of interest according to internal revenue code 267 if it finds conflicts the irs will not allow any tax benefits claimed from the transaction in particular the irs often scrutinizes property sales between related parties and deductible payments between related parties 7the bottom linea related party transaction is conducted between two parties that have a preexisting business relationship these transactions carry the potential for conflicts of interest so the activity is monitored by regulatory bodies such as the sec and the fasb 