The present value of the PCT Payor’s licensing alternative may be determined using the comparable uncontrolled transaction method, as described in § 1.482-4(c)(1) and (2). In this case, the present value of the PCT Payor’s licensing alternative is the present value of the stream, over what would be the duration of the CSA Activity under the cost sharing alternative, of the reasonably anticipated residuals of the divisional profits or losses that would be achieved under the cost sharing alternative, minus operating cost contributions that would be made under the cost sharing alternative, minus the licensing payments as determined under the comparable uncontrolled transaction method.
§ 1.482-7(g)(4)(iii)(A) Evaluation based on CUT.
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By Internal Revenue Service
Category: US IRC Section 482 on Transfer Pricing, § 1.482-7 Methods to determine taxable income in connection with a cost sharing arrangement | Tag: CCA/CSA, CCA/CSA - methods for pricing, Comparable uncontrolled price method (CUP), Comparable with same type of intangibles, Cost Contribution Arrangement (CCA), Cost Sharing Arrangement (CSA), Pre-existing intangibles, Valuation, Valuation of intangibles
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