Xilinx Inc. and Subsidiaries - Page 23

              Section 482 places a controlled taxpayer on a tax parity                
         with an uncontrolled taxpayer by determining the true taxable                
         income of the controlled taxpayer.  Sec. 1.482-1(a)(1), Income               
         Tax Regs.  In determining true taxable income, “the standard to              
         be applied in every case is that of a taxpayer dealing at arm's              
         length with an uncontrolled taxpayer.”  See United States Steel              
         Corp. v. Commissioner, 617 F.2d 942, 947 (2d Cir. 1980) (stating             
         the “‘arm's length’ standard is * * * meant to be an objective               
         standard that does not depend on the absence or presence of any              
         intent on the part of the taxpayer to distort his income.”),                 
         revg. T.C. Memo. 1977-140; sec. 1.482-1(b)(1), Income Tax Regs.              
         Because identical transactions are rare, the arm’s-length result             
         will “generally * * * be determined by reference to the results              
         of comparable transactions under comparable circumstances.”  Sec.            
         1.482-1(b)(1), Income Tax Regs.                                              
              B.   Application of Section 482 to Qualified Cost-Sharing               
              Section 482 provides that “In the case of any transfer * * *            
         of intangible property * * * the income with respect to such                 
         transfer * * * shall be commensurate with the income attributable            
         to the intangible.”  Participants in a qualified cost-sharing                
         agreement (QCSA) relinquish exclusive ownership of all                       
         exploitation rights in new intangibles they individually develop             
         and agree to share ownership of, and costs associated with, such             

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Last modified: May 25, 2011