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Trademark taxation: what's in a name?

Trademark Taxation: What's in a Name?


What's in a name? The question might sound like a cliche, but in view of evolutionary changes in the consumer sector of many world economies, well recognized trademarks and trade names can become unrecorded assets of substantial value to both domestic and multinational entities (MNEs). This general increase in the value of marketing intangibles has not escaped the watchful eyes of Congress and the Treasury Department as evidenced by recent changes to the Internal Revenue Code. (1)

Tax executives are now faced with the challenge of evaluating not only the tax effect of economic assets reflected in financial statements and tax returns, but also the tax attributes associated with unrecorded intangible assets. In this regard, the tax executive must be sensitive to the tax ramifications of what marketing executives strive to do: enhance customer recognition of a product or service. The costs associated with a portion of this recognition process and the related tax pitfalls and opportunities presented by the repeal of section 177 and application of sections 367, 482, 861, and 904 are the subjects of this article. (*1)


Treasury Regulations Sections 1.1253-2(b) and (c) and case law (2) provide the following generally accepted definitions:

Trademark: "Any word, name, symbol, or device, or any combination thereof, adopted and used bya manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others."

Trade name: "Any name used by a manufacturer or merchant to identify or designate a particular trade or business or the name or title lawfully adopted and used by a person or organization engaged in a trade or business."

As a matter of practice, a trademark is generally identified with a perticular product being sold as contrasted with a trade name which is generally identified with the entity performing the selling activity. Exhibit I illustrates the differences between trademarks, trade names, and other intangibles not addressed herein. For purpose of this article, trademarke and trade names are discussed inclusively as trademarks.


The repeal of section 177, generally effective for costs incurred after December 31, 1986, is one of the quieter tax law changes made by the Tax Reform Act of 1986. (3) Prior to repeal, section 177 permitted an elective amortization deduction of not less than 60 months for certain trademark and trade name expenses which otherwise would have constituted capital expenditures pursuant to section 263. The repeal of section 177 effectively requires taxpayers to capitalize all costs directly connected with the acquisition, protection, expansion, registration, or defense of a trademark or trade name with an indeterminate useful life.

In addition to non-deductibility on an entity's tax return, capitalized trademark costs may meet the "permanent difference" criteria of A.P.B. No. 11 (4) while creating a long-term temporary difference which may necessitate a "tax planning" strategy for purposes of F.A.S. No. 96. (5) Therefore, the tax executive should endeavor to accurately identify, distinguish, and minimize capitalizable costs associated with indefinite life trademarks.

Important to the process of identification of capitalizable trademark expenses is cooperation of internal and external legal counsel. Outside counsel should be made aware of the associated issue and requested to provide the entity with appropriately detailed billing statements. Similarly, internal legal counsel should be educated in the area, with time and applied assets being identified and allocated accordingly. Careful instructions should be provided to identify only costs associated with "arbitrary" and "suggestive" trademarks for which protection is afforded and therefore a capital asset created. Other trademarks with little or no protection such as "descriptive" or "generic" trademarks should be excluded from review owing to the lack of asset value.

The compliance tracking process should involve use of a set of criteria for distinguishing costs associated with the protection of the trademark capital asset from costs associated with protection of the associated income. Such a distinction was made by the Tax Court in J.R. Wood & Sons, Inc., (6) which provided that the costs associated with the protection of trademark income were deductible as ordinary and necessary business expenses.

In addition to proper segregation of costs, careful consideration should be given to allocation of domestically incurred trademark expenses to any dirsctly benefitted foreign affiliates. Although the allocated expense will not be allowed as a deduction for earnings and profits computation purposes, (7) any allowable foreign tax deduction will reduce the trademark's after-tax cost. Further, such an allocation might contribute to a marketing intangible "cost-sharing" arrangement (discussed below).

Consideration should also be given to identifying the trademark component as a separate section 1060 Class III asset in a taxable asset purchase involving a trademark. (8) Basis may be recovered pursuant to section 165 upon any future loss, abandonment, or discontinuance of the trademark. (9) Impairment of a trademark through an objective action such as an infringement injunction will generally be easier to support upon audit than the subjective loss of goodwill.

Exhibit II sets forth a trademark capitalization worksheet, which can be utilized in identifying and quantifying trademark costs potentially subject to capitalization. The checklist may be helpful in identifying some of the more important tax issues affecting an MNE's valuable trademark.



The Tax Reform Act of 1986 amended section 482 to provide that if intangible property is transferred or licensed to a related party, the income from such transfer or license must be "commensurate with the income attributable to the intangible." (10) The definition of intangible property for purposes of this provision is contained in section 936(h)(3)(B), and includes (1) patents, (2) copyrights, (3) know-how, (4) trademarks, (5) franchises, and (6) customer lists.

The General Explanation of the Tax Reform Act of 1986, prepared by the staff of the Joint Committee on Taxation (hereinafter cited as the "General Explanation), (11) states that "the bill does not intend to mandate the use of the contract manufacturer or cost-plus method of allocating income or any other particular method." (12) Despite this disclaimer of mandatory use of the cost-plus method, contract manufacturing and contract marketing appear to be precisely the positions underlying the super royalty provision. Some taxpayers feel that the Internal Revenue Service has legislatively succeeded in advancing the contract manufacturing position, which had generally proved to be an unsuccessful litigating position for the IRS. (13) The General Explanation goes on to say that "functional analysis" will be looked to more than comparables and that "... the profit or income stream generated by or associated with intangible property is to be given primary weight." (14)

One issue of immediate concern arises in a practical application of the amendment's effective date. The super royalty amendment applies to taxable years beginning after December 31, 1986, but only with respect to trademark transfer or licenses granted after November 16, 1985 (or before such date with respect to property not in existence or owned by the taxpayer on such date). Since preexisting transfers and licenses are not subject to the super royalty, one key question is what constitutes a "trasfer" for effective date purposes. Although pre-existing licenses that allow for transfers of newly developed intangible property are treated as if entered into after November 16, 1985, (15) it is unclear whether a substantie amendment, or self-adjusting termination and renegotiation clause, will subject existing related party trademark license agreements to super royalty scrutiny. The answer to this question is not expected until regulations are promulgated.

B. Tax Planning

Although the super royalty provisions are formidable, several tax planning strategies might be available to mitigate the risk or even develop tax savings in certain scenarios.

1. U.S. Licensor/Transferor

* High Foreign Tax Rate. If the related licensee is domiciled in a jurisdiction with a higher effective tax rate than that of the U.S. licensor, tax savings might be realized by application of the super royalty provisions. Key factors which must be considered in order to realize any tax savings under this scenario include:

* Assured "super deductions" for all royalty payments (see Double Taxation Relief discussion below);

* The effect of any foreign withholding taxes;

* Section 904 "basket" characterization (see Foreign Tax Credit Issues discussion below); and

* The impact of domestic state income taxes.

Consideration should be given to incorporation of a consolidated domestic trademark "holding company" domiciled in a non-income tax state to eliminate the state tax effects of "allocable" royalty income.

* Low Foreign Tax Rate. The General Explanation introduces the concept of a flexible royalty. The explanation states in part that "Congress intended to require that the payments made for the intangible be adjusted over time to reflect changes in the income attributable to the intangible." (16) Although it is highly unlikely that the IRS will initiate downward adjustments, it is recommended that such a provision be drafted into existing and future related party royalty agreements to be invoked in the event that a trademark subsequently decreases in value. This is especially important to consumer product companies for which a secondary trademark might have a short life in the marketplace.

2. Foreign Licensor/Transferor

The General Explanation states in part: "In view of the fact that the objective of these provisions--that the division of income between related parties reasonably reflects the relative economic activity undertaken by each--applies equally to inbound transfers. . . . " (17) Simply stated, the super royalty provision applies equally to U.S. licensees of foreign trademarks. Thus, if a foreign affiliate is the legal owner of a trademark producing U.S. income, and the foreign owner is domiciled in a jurisdiction with a lower combined tax rate (e.g., the U.K.), an opportunity exists to shift income to the lower rate foreign affiliate.

For example, a U.K. parent company with a 35-percent effective tax rate which owns a U.S. subsidiary with a 40-percent effective rate (34 percent federal and 6 percent state) can take advantage of a 5-percent tax rate differential by licensing its trademark to the subsidiary. The result is even more favorable if the U.S. licensee takes a higher super royalty deduction whereas the U.K. parent's income inclusion is premised on a lesser arm's-length standard.

C. Double Taxation Relief

Many of the United States treaty partners claim that the super royalty provision deviates from the arm's-length standard used by the OECD. (18) Accordingly, foreign countries can be expected to use their own arm's-length pricing provisions to restrict the ability of local subsidiaries to pay deductible super royalties to U.S. parent corporations. It is anticipated that U.S. taxpayers may be forced to resort to at least three possible relief mechanisms to mitigate the effects of double taxation: (1) blocked income accounting, (2) utilization of foreign tax credits, and (3) competent authority

1. Blocked Income. Treas. Reg. Sec. 1.482-1 (d)(6) permits a U.S. corporation to elect deferral of income recognition resulting from section 482 allocations if payment (i.e., actual transfer of funds) from the foreign affiliate is restricted by the laws of a foreign country. Specifically, the regulations state:

If payment or reimbursement for the sale, exchange, or use of property ... among members of a group of controlled entities was prevented, or would have been prevented, at the time of the transaction because of currency or other restrictions imposed under the laws of any foreign country, any ... allocations which may be made under section 482 with respect to such transactions may be treated as deferrable income or deductions, providing the taxpayer has ... elected to use a method of accounting in which the reporting of deferrable income is deferred until the income ceases to be deferrable income. (19)

An examination of the following rulings may be helpful in understanding the relevance and application of the blocked income election:

* Revenue Ruling 74-245 (20) held that the opinion of foreign counsel is sufficient to establish blockage for purposes of Treas. Reg. Sec. 1.482-1(d)(6). In this ruling, U.S. parent (P) was advised by competent foreign legal counsel that a foreign county would not be receptive to approving royalty payments from P's wholly owned foreign subsidiary (S) to P, and might consider imposing economic sanctions on S if P attemted to force S to make such payments. P's election to defer royalty income in this situation was allowed by the IRS.

* In Technical Advice Memorandum 8703003, (21) the IRS addressed a situation in which the examining agent proposed a reallocation of royalty income to a U.S. parent corporation from its foreign subsidiaries even though the royalty payments were either in fact blocked by foreign countries, or the U.S. taxpayer had received the opinion of competent foreign legal counsel that the relevant foreign country would not permit payment of the royalty. In the ruling, the IRS permitted a conditional deferred income election subject to the agent's findings being sustained on appeal. The IRS also stated that "deferred expenses" must be allocated to "deferred income." No reduction of foreign corporation's earnings and profits for U.S. tax purposes was permitted until the income ceased to be deferrable.

2. U.S. Foreign Tax Credit. Another avenue of relief is application of foreign tax credits. In some situations the U.S. tax effect of a section 482 reallocation can be mitigated or eliminated through utilization of current or carryover foreign tax credits. However, it is important to note that in Revenue Ruling 76-508 (22) the IRS ruled that prior to allowing a foreign tax credit on double taxed income, a foreign tax refund request by the foreign subsidiary and, if necessary, a competent authority request by the U.S. parent may be required in order to avoid reduction of foreign taxes for purposes of computing the section 902 deemed-paid foreign tax credit. Treas. Reg. Sec. 1.905-2(e)(5) formerly stated a similar rule for purposes of the section 901 direct foreign tax credit.

3. Competent Authority. In situations where Treas. Reg. Sec. 1.482-1(d)(6) is ineffective because the foreign licensee's country permits a royalty payment but allows no foreign deduction, a U.S. taxpayer will be forced to request competent authority assistance to obtain complete relief from double taxation. The competent authority mechanism is a procedure available to U.S. taxpayers by virtue of treaty provisions granting tax negotiating authority to the Secretary of the Treasury and his counterpart in virtually all countries with which the United States has entered into tax treaties. The "mutual agreement" article in most U.S. tax treaties provides that the competent authorities of the United states and the foreign country may consult with each other to eliminate actual or economic double taxation. (23)

Revenue Procedure 82-29 (24) discusses the procedure for requesting competent authority relief in section 482 allocation cases. The procedure is relatively flexible in terms of when the request may be filed. Competent authority assistance may be requested as soon as the taxpayer receives adequate information about the proposed adjustments and believes that the adjustments may result in double taxation. It is not necessary for the taxpayer to exhaust his domestic remedies, such as an appeals procedure.

Unfortunately, several foreign governments have intimated informally that the super royalty provision deviates from mutual arm's-length standards and therefore is a different tax system not protected by the competent authority process. This is because the "mutual agreement" article has been held not to provide relief in cases where the reason for the double taxation is due to a difference in tax systems of the two countries, and the difference is not specifically addressed in the relevant treaty. (25)

The Treasury's still-inchoate Section 482 White Paper is expected to argue that the super royalty is consistent with the arm's-length standard embodied in the 1979 OECD report entitled "Transfer Pricing and Multinational Enterprises." Nevertheless, the effectiveness of the competent authority process as a relief mechanism from super royalty double taxation remains to be seen. Many U.S. taxpayers are skeptical.

D. Cost-Sharing Agreements

In a cost-sharing agreement (CSA), common ownership rights in intangible property are conferred on members of an affiliated group of corporations by sharing the costs and risks of developing intangible property before it exists. The benefit of a CSA is that once the intangible property is developed, its subsequent use by affiliated corporations that are party to the agreement may be made without a section 482 arm's-length charge.

In recent court decisions, as well as legislative changes to section 936, a trend toward "safe harbor" CSAs with respect to manufacturing intangibles (e.g., patents) prevails. This trend was reinforced by the Conference Report's discussion of the super royalty provisions of the Tax Reform Act of 1986. The Conference Report states that R&D cost-sharing arrangements are permissible only if R&D costs are shared proportionately with profit and the timing of the contribution of funds as well as assumption of risks are appropriately taken into account. (26)

Although the Conference Report addresses only R&D (manufacturing intangible) cost sharing, (27) the super royalty legislation is not generally interpreted as excluding cost sharing for marketing intangibles such as trademarks. A reading of the existing section 482 regulations (28) also reveals nothing to preclude such arrangements. The forthcoming Section 482 White Paper, however, will likely be skeptical of marketing intangible cost sharing. In this regard, the Treasury has expressed concern that (1) markets are not jointly developed, (2) marketing personnel can easily be transferred, and (3) marketing costs are easily subject to manipulation. Whether the White Paper recommends an outright ban on such arrangements remains unclear.

If marketing intangible CSAs remain a viable alternative, situations still exist in which a profit-based cost-sharing agreement might yield a better answer than a post-1986 Act royalty charge, particularly with a low-cost, high-value/profit trademark. Exhibit III illustrates such a case. A CSA becomes even more attractive when operating in a foreign jurisdiction where royalties paid or accrued would not be allowed as a deduction.

One problem with the CSA alternative is the uncertainty surrounding the deductibility of a profit-based cost-sharing payment in some foreign jurisdictions. For example, the current arm's-length pricing laws of Canada, Australia, Germany, and Japan may potentially be interpreted as limiting the deductibility of profit-based CSA payments.

Other cost-sharing issues identified and expected to be addressed by the White Paper include (1) defining the scope of CSAs to prevent "cherry-picking," and (2) solving the "buy-in" problem to compensate for the contribution of intangibles developed prior to establishment of the CSA.


A. Operation of Section 367(d)

Section 367(d)(1), as amended by the Deficit Reduction Act of 1984, (29) removed outbound transfers of intangible property from the prior automatic toll charge of section 367(a) and subjected such transfers to section 367(d). Under section 367(d)(2), the U.S. transferor of intangibles to a foreign corporation in a section 351 exchange is treated as having sold the intangibles in exchange for annual payments contingent on the productivity or use of the transferred property over the intangible's useful life. The regulations provide that the useful life of an intangible is considered the entire period during which the intangible has value or 20 years, whichever is less. (30) Thus, the useful life for most trademarks will be deemed to be 20 years.

Amounts included in income by the U.S. transferor under section 367(d)(2) are treated as U.S.-source income and are not eligible for the blocked foreign income election. (31) The foreign transferee is permitted an earnings and profits reduction to the extent of the U.S. transferor's income recognition. (32)

The 1986 Act retained the 1984 statutory scheme, but amended section 367(d)(2) to provide that income from the transfer of the intangible must be "commensurate with the income attributable to the intangible." (33)

B. License vs. Deemed Transfer

In deciding whether to structure the transfer of a U.S.-owned trademark to a foreign affiliate as an actual license as opposed to a deemed transfer under section 367, the tax executive should consider the following:

* Assuming the trademark will be used in the foreign country (e.g., affixed to goods there), royalty income received by the U.S. parent pursuant to section 482 will generally constitute foreign-source income. (34) Whereas income inclusions under section 367(d)(2) will be U.S. source. (35)

The importance of sourcing cannot be overemphasized: royalty income constitutes an excellent source of low-taxed (active basket, if properly structured) foreign-source income to utilize excess foreign tax credits experienced by most U.S. taxpayers subsequent to the 1986 Act.

* The blocked foreign income election is available under section 482 but not under section 367. (36)

As a general rule, these considerations should make an actual license under section 482 the more favorable alternative.


A. Basket Characterization

Assuming the goal for an MNE is to generate low-taxed foreign-source income in the active basket, it is critical to structure royalties as active rather than passive basket income for section 904 purposes. Under the look-through rule of section 904(d)(3)(C), royalty income received by a U.S. shareholder from a controlled foreign corporation (CFC) is treated as passive basket income to the extent that the CFC's royalty expense is properly allocable to passive basket income at the CFC level. Thus, if a CFC deducts royalty payments to its U.S. parent in the course of its manufacturing (active basket) operations, the royalty payments will constitute active basket income to the U.S. parent.

If, on the other hand, the CFC merely sub-licenses the U.S. parent's trademark, then royalty income received by the U.S. parent from the CFC will constitute passive basket income unless (1) the CFC's royalty income from sub-licensing is received in the active conduct of a trade or business from an unrelated party; or (2) the high tax kick-out rule of section 904(d)(2)(F) applies. Pursuant to Treas. Reg. Sec. 1.904-4(c)(5)(i), rents and royalties of each qualified business unit (QBU) are grouped together in applying the high tax kick-out.

The final section 904 regulations, (37) adopted July 15, 1988 state that Treas. Reg. Sec. 1.954-2(d)(1) is used in determining whether rents and royalties received from unrelated parties qualify for the active trade or business exception. (38) The active trade or business exception will be satisfied if either the CFC or an affiliated U.S. corporation--

develops, creates, or produces intangible property, but only if the CFC or U.S. affiliate regularly acquires or adds substantial value to intangibles (other than by marketing); or markets intangible property in a foreign country as part of its own business, provided the marketing of the property is substantial in relation to the royalties received.

An additional requirement contained in proposed regulations, (39) that the CFC itself perform significant service in generating the royalty income, was deleted from the final section 904 regulations.

Satisfaction of the active trade or business test on an affiliated group basis may present a planning opportunity for U.S. parent companies to "treaty shop" for favorable withholding rates if establishing foreign royalty holding companies.

B. Low- vs. High-Taxed Income

Active vs. passive status, determined under Treas. Reg. Sec. 1.954-2(d)(1), also affects whether the U.S. taxpayer's income is characterized as royalty income or a deemed dividend (foreign personal holding company income). The distinction is crucial. Royalty income will only attract foreign withholding taxes whereas a subpart F deemed dividend will also attract section 902 deemed-paid taxes. Exhibit IV contains an example illustrating this low- vs. high-taxed effect.

C. Interest Expense Apportionment Under Treas. Reg. Sec. 1.861-8

Under prior regulations, (40) a valuable unrecorded trademark presented planning opportunities with regard to allocation of interest based upon the fair market value of assets. In certain circumstances the large value attributed to a domestic-source trademark could attract a significant amount of allocable interest expense as compared with application of the "tax basis" method. As a result of changes in the apportionment rules brought about by the 1986 Act, (as implemented in recently released temporary regulations), (41) the relative impact of valuable trademarks is less certain.

As previously explained, trademark expenses capitalized under section 263 will create a tax basis asset that will require "characterization" if the "tax book value" method of apportionment is chosen. This characterization will be influenced by the underlying "sourcing" applicable to both customary royalty streams as well as the new super royalty provisions. Less clear is the impact of a valuable trademark under the Temporary Regulation Section 1.861-9T(h) "fair market value" method. Trademarks, which have previously been characterized as U.S.-source assets because they generated predominantly U.S.-source income, may now be characterized as foreign-source assets under Temp. Reg. Sec. 1.861-9T(h)(1)(iii). Under the new fair market value method, intangibles such as trademarks are deemed to be reflected in the underlying value of a corporate rate entity's stock. Under Temp. Reg. Sec. 1.861-9T(h)(1)(iii), the value of intangibles is determined as the result of subtracting the value of tangible assets from the total value of group assets. This residual pool of intangible value is then apportioned under Temp. Reg. Sec. 1.861-9T(h)(2) based upon ratios of adjusted net income before interest and taxes.

This appointment process provides both risk and opportunity. Depending upon the value and characterization of the trademark, as well as the ratio of earnings before interest and taxes of all "related parties," the result could be domestic assets that have substantially higher value than their foreign counterparts. Thus, in select situations the overall benefit provided to the foreign tax credit limitation fraction of section 904 to which a valuable trademark may contribute might mitigate the compliance problems and audit uncertainties associated with utilization of the fair market value method.


What's in a name? It is hoped that the preceding discussion has led the tax executive to an answer that identifies practical tax issues which are inherent in trademarks. In light of this area's potential effect on financial statement as well as statutory taxable income, careful analysis and tax planning with regard to trademark taxation should enable the tax executive to increase an entity's financial strength and overall value via further tax minimization.

Footnotes -- Trademark Taxation - What's in a Name?

(1) Unless otherwise indicated, references to sections in this article are to the Internal Revenue Code of 1986, as amended.

(2) See SmithKline Beckman Corp. v. Pennex Products Co., 605 F. Supp. 746. (D.Pa. 1985).

(3) Pub. L. No. 99-514.

(4) Accounting Principles Board Opinion No. 11, paragraph 33.

(5) Statement of Finiancial Accounting Standards No. 96, paragraph 9.

(6) J. R. Woods & Sons, Inc., T.C. Memo 1962-189.

(7) Commitee Reports on Pub. L. No. 98-369, amending I.R.C. Section 312(n)(3).

(8) Temp. Reg. Sec. 1.1060-1T(d)(2)(ii).

(9) I.R.C. [Section]165(a). See also Hazeltine Corp. v. United States, 170 F. Supp. 615 (Ct. Cl. 1959).

(10) Pub. L. No. 99-514, [Section]1231(e)(1).

(11) Staff of Joint Comm. on Taxation, 99th Cong., 2d Sess., General Explanation of the Tax Reform Act of 1986, at 1014-15 (Comm. Print 1986) (hereinafter "General Explanation").

(12) General Explanation at 1016.

(13) See, e.g., Eli Lilly Co. v. Commissioner, 84 T.C. 996 (1985); G. D. Searle & Co. v. Commissioner, 88 T.C. 16 (1987).

(14) General Explanation at 1016.

(15) Pub. L. No. 99-514, [section]1231(g)(2)(A).

(16) General Explanation at 1016.

(17) Id. at 1016,1017.

(18) Organization for Economic Cooperation and Development.

(19) Treas. Reg. Sec. 1.482-1(d)(6).

(20) 1974-1 C.B. 124.

(21) Technical advice memoranda may not be cited or relied upon by taxpayers as precedent. They may, however, provide useful insight into current I.R.S. policy.

(22) 1976-2 C.B. 225.

(23) See, e.g., 1981 U.S. Model Treaty, art. 25.

(24) 1982-1 C.B. 481.

(25) See e.g., Rev. Rul. 54-53, 1954-1 C.B. 156.

(26) Conference Report to 1986 Act, at 11-638.

(27) Id. at 11-638.

(28) Treas. Reg. Sec. 1.482-2(d)(3) and (4).

(29) Pub. L. No. 98-369.

(30) Temp. Reg. Sec. 1.367(d)-1T(c)(3).

(31) Temp. Reg. Sec. 1.367(d)-1T(c)(4).

(32) I.R.C. [Section]367(d)(2)(B).

(33) Pub. L. No. 99-514, [Section]1231(e)(2).

(34) See I.R.C. [Section]826(a)(4); Rev. Rul. 68-443, 1968-2 C.B. 304.

(35) I.R.C. [Section]367(d)(2)(C).

(36) See Treas. Reg. Sec. 1.482-1(d)(6); Temp. Reg. Sec. 1.367(d)-1T(c)(4).

(37) T.D. 8214.

(38) the provisions of Treas. Reg. Sec. 1.954-2(d)(1) are currently incorporated in Temp. Reg. Sec. 1.954-2T (d)(1).

(39) Prop. Reg. Sec. 1.904-6(b)(2)(ii).

(40) treas. Reg. 1.861-8(e)(2)(v).

(41) T.D. 8228, adopted September 9, 1988.
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Author:Mucek, Bradley J.
Publication:Tax Executive
Date:Sep 22, 1988
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