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trademark fall short of the strictest quality control standards
requisite for a textbook-quality license agreement that may be
required as between unrelated third parties, they are sufficient
and enforceable in the circumstances here.
Petitioners make a collateral attack on the ownership issue.
They seek refuge in section 482 regulations in an attempt to show
that the form they chose should not be respected. Petitioners’
argument focuses on the 1968 regulations11 and points out that
they do not contain mention of a license as a factor relevant to
which person or entity should be considered to have “developer”
status of intangible property. See sec. 1.482-2(d)(1)(ii),
Income Tax Regs. In essence, petitioners argue that legal
ownership should be disregarded for purposes of any section 482
reallocation of intangibles.
Respondent argues that the facts here support a finding that
DHL is the developer or that the regulations in question provide
that, in the absence of a bona fide cost-sharing arrangement,
respondent may make allocations upon the transfer of intangible
property by the developer to a related entity. Respondent
11 The parties refer to the regulations that were
promulgated in 1968 because the newer sec. 482 intangible
property regulations were adopted in 1994, and petitioners did
not elect, pursuant to sec. 1.482-1(j), Income Tax Regs. (1994),
to have them apply retroactively.
Sec. 1.482-2(d), Income Tax Regs., was effectively
superseded by sec. 1.482-4T, Temporary Income Tax Regs., 58 Fed.
Reg. 5263, 5287 (Jan. 21, 1993), generally effective for taxable
years beginning after Apr. 21, 1993. The tax years in issue are
1990, 1991, and 1992.
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