The IRS today publicly released a redacted field advice memorandum* addressing the treatment of a taxpayer’s transfer of rights in a loss corporation intangible property to a foreign subsidiary under sections 382 and 482. 20151701F (dated February 20, 2015)
The field advice memo [PDF 142 KB] notes that:
The conclusions provided in today’s IRS field advice memo disagree with the taxpayer’s contentions. The memo disagrees that any license of property should be treated as a sale under section 382; and finds that considering only the written terms of the contract and the cost sharing arrangement, the transaction was an economic disposition of the IP rights.
The IRS memo further states that an adjustment under section 482 may be appropriate with respect to the loss corporation’s IP transferred, depending on the facts and circumstances.
The IRS also today publicly released an earlier field advice memo in this matter. Read 20151702F[PDF 166 KB] (dated November 3, 2014). The second memo (20151701F) summarized briefly above, includes a statement that the November 2014 memo is to be ignored and replaced with 20151701F (dated February 20, 2015) because “the first version did not receive appropriate review.”
*Field advice memo documents are prepared by IRS field attorneys in the Office of Chief Counsel, are reviewed by an Associate Office, and are subsequently issued to IRS field or service center employees. The memo cannot be used or cited as precedent.
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.