The Resource Defending against IRS audits of cost sharing arrangements under the new cost sharing regime

Defending against IRS audits of cost sharing arrangements under the new cost sharing regime

Label
Defending against IRS audits of cost sharing arrangements under the new cost sharing regime
Title
Defending against IRS audits of cost sharing arrangements under the new cost sharing regime
Creator
Subject
Language
eng
Summary
A cost sharing agreement (CSA) is a popular arrangement for corporate taxpayers wishing to align ownership of their intangible property with their global operating structure. Because the IRS believes that these arrangements may provide unintended benefits, they are subject to intense scrutiny and encouraged Treasury to introduce significantly revised CSA regulations (effective 5 January 2009). The first IRS audits of CSAs subject to these new regulations are now underway and are exposing several areas of contention. Based on the high level of CSA audit activity, audit trends and patterns are emerging that provide valuable insights on IRS approaches. Some issues routinely raised in audits under the former CSA regulations remain points of contention under the new CSA regulations, such as (i) the reliability of projections; (ii) the life of covered intangibles; (iii) the relevant amortization function; and (iv) the appropriate discount rates. New areas of IRS focus have also emerged, including (i) increased emphasis on fact development and substantiation; (ii) the allocation of profit derived from synergies; (iii) the application of a terminal value; (iv) the definition, identification, and evaluation of goodwill and going concern; and (v) new requirements for establishing a discount rate under the income method. This article examines these five significant areas of IRS focus, considers the positions the IRS Exam Division and IRS Appeals often adopt with respect to these issues, and presents considerations for navigating these areas
Citation source
In: Tax management international journal. - Arlington. - Vol. 44 (2015),
http://library.link/vocab/creatorName
Tobin, J.L
Geographic coverage
North America
Language note
English
http://library.link/vocab/subjectName
  • transfer pricing
  • audit
  • cost sharing arrangement
  • intangibles
  • goodwill
  • going concern
Label
Defending against IRS audits of cost sharing arrangements under the new cost sharing regime
Instantiates
Publication
Label
Defending against IRS audits of cost sharing arrangements under the new cost sharing regime
Publication

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