The U.S. IRS has published a Memorandum from the Office of Chief Counsel concerning the regulations for cost sharing arrangements (CSA), which require that cost sharing participants share the costs and risks of developing intangibles by engaging in cost sharing transactions (CST), resulting in CST Payments that are required to be determined by reference to the share of reasonably anticipated benefits (RAB).
The Memorandum addresses a request for legal advice regarding the recurring issue of whether the cost sharing regulations in § 1.482-7 prohibit the use of multiple RAB shares within a single CSA. The request arose specifically in response to a case in which a taxpayer determined an arm’s length price for a subsequent platform contribution transaction (PCT) that was a different percentage (of an acquisition price) than the RAB share used to determine current CSTs. The Memorandum sets out the issues as follows:
With respect to the two issues, the Memorandum provides the following conclusions:
Click the following link for the full text of the Memorandum.
We’re here to answer any questions you have about the Orbitax products and services.
We’re committed to providing high value, low cost tax research and management solutions.
Our Twitter account is where you can find latest information, news updates, offers and lots more.