Tag: Akin to a sale

US vs. Amazon, March 2017, US Tax Court, Case No. 148 T.C. No 8

US vs. Amazon, March 2017, US Tax Court, Case No. 148 T.C. No 8

/ Akin to a sale, CCA/CSA, Cost Contribution Arrangements, Cost Sharing Arrangement (CSA), CSA regs, CUT method, DCF model, Delaware, Digital Economy, Indefinite useful life, Intangibles - Goodwill Know-how Patents, Ireland, Luxembourg, Platform Contribution Transaction, Pre-existing intangibles, Relief from Royalty method, Stock-based compensation, Tax Avoidance Schemes, Terminal value, Transfer Pricing Methods, United States, Valuation, Valuation - DCF and CUT/CUPs
Amazon is an online retailer that sells products through Amazon.com and related websites. Amazon also sells third-party products for which it receives a commissions. In a series of transactions  in 2005 and 2006, Amazon US transferred intangibles to Amazon Europe, a newly established European HQ placed in Luxembourg. A Cost Sharing Arrangement (“CSA”), whereby Amazon US and Amazon Europe agreed to share costs of further research, development, and marketing in proportion to the benefits A License Agreement, whereby Amazon US granted Amazon Europe the right to Amazon US’s Technology IP An Assignment Agreement, whereby Amazon US granted Amazon Europe the right to Amazon US’s Marketing IP and Customer Lists. For these transfers Amazon Europe was required to make an upfront buy-in payment and annual payments according to the cost sharing arrangement for ongoing developments of the intangibles. In the valuation, Amazon had considered the intangibles to have a lifetime of 6 to 20 years. On that basis, the buy-in payment for pre-existing ... Read more
US vs. Veritas Software Corporation, December 2009, US Tax Court, Case No 133 T.C. 297, 316

US vs. Veritas Software Corporation, December 2009, US Tax Court, Case No 133 T.C. 297, 316

/ Aggregation of the intangibles, Akin to a sale, Cost Contribution Arrangements, Digital Economy, Intangibles - Goodwill Know-how Patents, Ireland, Lump-sum payment, Pre-existing intangibles, Synergies, Tax Avoidance Schemes, Terminal value, Trade name, Trademark (trade name), United States, Valuation, Valuation - DCF and CUT/CUPs
The issue in the VERITAS case involved the calculation of the buy-in payment under VERITAS’ cost sharing arrangement with its Irish affiliate. VERITAS US assigned all of its existing European sales agreements to VERITAS Ireland. Similarly,VERITAS Ireland was given the rights to use the covered intangibles and to use VERITAS US’s trademarks, trade names and service marks in Europe, the Middle East and Africa, and in Asia-Pacific and Japan. In return, VERITAS Ireland agreed to pay royalties to VERITAS US in exchange for the rights granted. The royalty payment included a prepayment amount (i.e. lump-sum payment) along with running royalties that were subject to revision to maintain an arm’s length rate. Thereafter, VERITAS Ireland began co-developing, manufacturing and selling VERITAS products in the Europe, the Middle East and Africa markets as well as in the Asia-Pacific and Japan markets. These improvements, along with the establishment of new management, allowed VERITAS’ 2004 annual revenues to be five times higher than its 1999 revenues ... Read more