Intellectual Property Tax PlanningMr. Cope has a wide range of experience planning for intellectual property ("IP") developed and exploited in a variety of industries, including technology, pharmaceuticals and software. He has worked with tax advisors in numerous jurisdictions to achieve successful outcomes for his clients. He also is mindful of the rapidly changing landscape of this area of the tax law, which can make popular planning strategies quickly obsolete.
Identifying Intellectual Property for Tax Purposes
Common types of intellectual property; The Internal Revenue Code’s more expansive definitions; the Internet and cloud transactions; Areas of controversy; the BEPS initiative.
Where to Develop v. Where to Own IP
The high-tax low-tax trade off; Develop and move strategies; Cost-recovery methods; Planning for unsuccessful outcomes; Pros and cons of various low-tax jurisdictions (with foreign advisors); splitting legal and beneficial ownership.
The single owner/developer model; Cost sharing, Alternatives to cost sharing (including contingent arrangements, partnerships, options, “electing out”); Issues with IRS valuation methods for existing IP and other resources and capabilities; IRS positions and pending cases.
Dispositions of IP
Character of the transaction; character of the income; source of the income; pros and cons of various types of payments (one-time payment, periodic fixed payments, milestone payments, contingent payments); Related-party transfers (valuation methods under section 482, the commensurate with income principle, section 367(d)).
The Changing Landscape
Implications for start-ups and IP planning generally of the following: the BEPS initiative; the ongoing OECD project on IP; forthcoming revised regulations under section 367(d); the Obama administration’s legislative proposals on IP; the Camp and Baucus legislative proposals.