Meeting of the Minds

The Valuation of Intellectual Property for Transfer Pricing Purposes

Xiaoying Zhang, Danny Ko, and Adam Karp

©2015. Published in Landslide, Vol. 8, No. 1, September/October 2015, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

Traditional intellectual property (IP) refers to copyrights, patents, and trademarks. Tax professionals reference IP interchangeably as intellectual property or intangible property, which is broader in scope. The Internal Revenue Code has several intangible property definition lists that include traditional IP and nontraditional IP such as customer lists and goodwill.1 IP migration refers to the outbound transfer of intangible assets from a company’s host country to its related foreign affiliates. The taxation of IP migration requires deriving an arm’s length price via a transfer pricing (TP) method—these methods are provided in the U.S. Treasury regulations2 and the Organisation for Economic Co-operation and Development (OECD) TP Guidelines.3

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