Taxation of Intellectual Property: Classifying Intangibles, Determining Domicile, Holding Structures, Amortization

Intellectual property is a broad description covering patents, copyrights, processes, trademarks, software, and a number of other types of intangible property. Different property types are subject to different tax guidelines in the U.S. Amortization rules vary based on the property type. Self-created property could be subject to Section 167 amortization, trade names and trademarks to Section 197, while Section 174 applies to R&E expenses.

Not only are the guidelines for expensing these assets voluminous and complex, where the IP is created and used affects its taxation. Introduced as part of the Tax Act of 2017, the GILTI regime is meant to equalize taxes paid in the U.S. with those paid overseas on these easily transferable assets. The revised provisions of GILTI, FDII, and the preexisting Subpart F muddle the decisions of where to locate these mobile assets and the choice of holding entity. Tax practitioners working with domestic and multinational entities that own, purchase, transfer, or create these assets need to understand and plan for the acquisition, transfer, and expensing of these valuable assets.

Listen as our panel of IP attorneys explains key features of these intangible assets so that tax advisers and businesses can maximize the tax benefits of owning these worthwhile resources.

1. Definition of intellectual property
   1. Codified intangibles
      1. 1. Patents
         2. Trademarks
         3. Copyrights
         4. Trade secrets
   2. Other intangibles
      1. 1. Good will
         2. ii. Marketing
         3. iii. Workforce in place
         4. iv. Publicity rights
2. IP creation
   1. U.S. vs. non-U.S.
   2. Cost sharing
   3. Cross border tax implications
3. Mobile income
   1. Choice of offshore domicile, patent box regimes
4. U.S. international tax issues
   1. GILTI
   2. FDII
   3. Subpart F
   4. Super royalty provisions under Section 367(D)
5. Transfer pricing considerations
   1. License or sale of IP
   2. Services

The panel will review these and other critical issues:

• Tax treatment of intellectual property by type of property
• Tax considerations for self-created property
• Locating the intangible asset: U.S. or abroad
• GILTI and FDII taxation of intellectual property
• Choice of offshore domicile

Learning Objectives

After completing this course, you will be able to:

• Ascertain key planning considerations when acquiring or disposing of IP
• Determine how IP is taxed under GILTI guidelines
• Decide which offshore entity is most appropriate in specific scenarios
• Identify applicable amoritzation methods by IP classifications

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of international taxation including residency determination, foreign entity classifications, application of treaty benefits, as well as GILTI, Subpart F, and the related Section 250 deductions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).