In some cases, the present value of an arm’s length PCT Payment may be determined as the present value, discounted at the appropriate rate, of the PCT Payor’s reasonably anticipated stream of additional positive or negative income over the duration of the CSA Activity that would result (before PCT Payments) from undertaking the cost sharing alternative rather than the licensing alternative (differential income stream). See Example 9 of paragraph (g)(4)(viii) of this section.
§ 1.482-7(g)(4)(v) Application of income method using differential income stream.
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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, Cost Contribution Arrangement (CCA), Cost Sharing Arrangement (CSA), Discounted Cash Flow (DCF), Income method, Pre-existing intangibles, Valuation, Valuation of intangibles
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