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Insights Vol. 4 No. 5: Updates & Other Tidbits

Insights Vol. 4 No. 5: Updates & Other Tidbits

This month, Astrid Champion and Nina Krauthamer look briefly at several timely issues, including (i) a novel claim of treaty residence in Ireland by a nonresident Irish domiciled individual subject to the domicile levy under Irish law and (ii) the introduction of a beneficial ownership register regime in the Cayman Islands regarding certain Cayman Islands corporations.

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Corporate Matters:  Five Steps for Leveraging your Start-Up’s Emerging Intellectual Property

Corporate Matters:  Five Steps for Leveraging your Start-Up’s Emerging Intellectual Property

For an emerging business, intellectual property (“I.P.”) can be the business’s most important asset and the difference between its success and failure.  That is why steps must be taken early on to protect those “jewels.”  Barry Lewin of Gottlieb, Rackman & Reisman, P.C. in New York explains five important actions designed to protect and enhance value.

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Amazon Makes the C.U.T. – An Important Taxpayer Win, A Reminder to Consider Transactional Evidence

Amazon Makes the C.U.T. – An Important Taxpayer Win, A Reminder to Consider Transactional Evidence

Last month, Insights reported on the Tax Court decision in Amazon v. Commr., involving the “buy-in” payment made as compensation for the right to use pre-existing I.P. in a related-party cost-sharing arrangement (“C.S.A.”).  This month, Michael Peggs comments on the lessons learned from the taxpayer victory in that case regarding (i) the transfer pricing method used, (ii) the assumptions made and analyses used to value the buy-in payment, and (iii) the correct treatment of intangible development costs within the term of the C.S.A.

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Net Operating Losses: A Valuable Asset Worth Preserving

Net Operating Losses: A Valuable Asset Worth Preserving

Troubled companies that incur significant net operating losses (“N.O.L.’s”) can carry back those losses for up to two years in order to obtain refunds of tax.  In addition, the losses can be carried forward for up to 20 years to reduce future taxable income.  However, the losses cannot be monetized through transfers to others.  Code §§382 and 269 and separate return limitation year (“S.R.L.Y.”) provisions under the consolidated tax return regulations are designed to prevent taxpayers from selling the benefit of the N.O.L. directly or indirectly.  Philip R. Hirschfeld explains how the loss limitation rules are applied when (i) a change occurs in the ownership of the loss corporation, (ii) a reshuffle of profitable and unprofitable businesses occurs to benefit from a “mixing bowl” effect, or (iii) companies with existing losses enter an affiliated group filing a consolidated Federal income tax return.

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Foreign Tax Credits: General Principles and Audit Risks

Foreign Tax Credits: General Principles and Audit Risks

In April, the Large Business & International Division (“LB&I”) of the I.R.S. published an International Practice Unit directed to the foreign tax credit claimed by individuals.  Tax advisers to Americans living abroad or having global investment portfolios may find that the Practice Unit indicates topics of interest for the I.R.S.  Fanny Karaman and Galia Antebi explain the concepts covered, including persons eligible to claim the credit, foreign taxes that qualify for credit, whether to deduct or credit a foreign income taxes, foreign tax credit limitations, and means of ameliorating the effect of unused credits in a particular year.

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