Extract to table

Subsidiary must comply with the arm's-length principle under both IRC § 482 and Part 35A of the Taxes Consolidation Act 1997 (as amended by Finance Act 2019)

Although the lump-sum payment is deductible in principle under § 162(a), an important subsidiary question is whether any portion of the payment must be capitalized rather than currently expensed

Under IRC § 263(a), amounts paid to acquire, produce, or improve tangible or intangible property must be capitalized

79 (1992), held that a taxpayer must capitalize an expenditure that creates or enhances a separate and distinct asset or produces significant future benefits beyond the current taxable year

If any portion of the lump-sum is capitalized as a cost of acquiring the non-exclusive patent license, the applicable amortization provision must be determined

is a Delaware C-corporation and, based on its revenue level and corporate structure, is required to use the accrual method of accounting for federal income tax purposes