Page 488 - Large Business IRS Training Guides
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Real World – Pre-TCJA Paradigm (cont’d)
3
1a. Upfront transfer of valuable IP
via Treas. Reg. 1.482-7 Platform
US Global Parent Contribution Transaction
(US Rate 35%) IRC 367(d) transfer
IRC 721(c) transfer (to partnership)
or even a direct IP sale
CFC
Ltd Risk Dist Co/s Foreign IP HC
Various Countries Bermuda
Tax Rate 30% Tax Rate 0%
1b. On-licensing
3. Limited Risk
Distributor
Service Fee Principal Co 2. Contract Ltd Risk Mfg Co
Netherlands Manufacturer Hong Kong
Tax Rate 25% Cost Plus Five Tax Rate 16.5%
Fee
42
