Extract to table

When these conditions are met, the transferor is required to include in its gross income, on an annual basis, amounts determined under the deemed royalty framework described in § 367(d)(2)(A)

These deemed payments are treated as ordinary income to the US transferor and must be recognized on an annual basis over the useful life of the intangible property

The amount of deemed income in each year must be "commensurate with the income attributable to the intangible," incorporating the same standard that governs controlled transactions under IRC § 482

because the deemed inclusion is calculated at a higher rate or because net sales are lower than projected), the difference must be included as additional deemed income by SMT Inc

must recognize for US tax purposes even though it has not received a corresponding cash payment

Accordingly, both transactions must satisfy the arm's-length standard