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Software: Transfer to Foreign Jurisdiction (IRC Section 482)

My team has developed a software in the states that will now be transferred to a foreign jurisdiction for US Tax purposes. The main reason is that the partners in the company will be relocating out of the country. What are the steps and sections I should pay attention in terms of Section 482 / Transfer Pricing? Any help is appreciated.

Answers

Mark Shornick
Title: CFO
Company: Numerix
(CFO, Numerix) |

Hi. You may be transferring appreciated property, especially if the dev cost was written off, in which case it will have zero tax basis. You may need a valuation to determine the taxable US gain on transfer. Appreciation thereafter may benefit from lower tax rates in the new jurisdiction, especially if it has favorable taxation of profits from IP (e.g. Ireland's 12.5% rate, UK's Patent Box regime).

Anonymous
(Chief Financial Officer) |

Thanks a lot for your answer. This is exactly what I have found on my research. I know that I may be asking too much, but does someone know of a good valuation firm? (Payment processing tech)

Topic Expert
Jake Feldman
Title: Managing Director
Company: Global TaxFin Advisory Group LLC
(Managing Director, Global TaxFin Advisory Group LLC) |

Since I've done transfer pricing work for Mark, please feel free to ask him for his recommendation (preferably offline). Typically, unless you have NOLs to shelter the gain, this would be structured as an outbound license with an ongoing royalty.

Please see my profile for contact information or do an internet search on my name and keywords "transfer pricing".

Jake

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