Page 489 - Large Business IRS Training Guides

Real World – Pre-TCJA Paradigm (cont’d)
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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

4. IP Royalty
CFC License Payment

Ltd Risk DistCo/s Determination Foreign IP HC
Various Countries made per Dutch Bermuda
Tax Rate 30% Unilateral APA Tax Rate 0%

1b. On-licensing

3. Limited Risk
Distributor
Service Fee Principal Co Ltd Risk Mfg Co

Netherlands 2. Contract Hong Kong
Tax Rate 25% Manufacturer Tax Rate 16.5%
Cost Plus Five
Fee

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