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intangibles. For purposes of section 482, this relinquishment
constitutes a transfer of specified future exploitation rights.
See sec. 1.482-7(a)(3), (g), Income Tax Regs.
Section 1.482-7(a)(1), Income Tax Regs., requires
participants “to share the costs of development of one or more
intangibles in proportion to their * * * [respective] shares of
reasonably anticipated benefits.” Anticipated benefits are
defined as “additional income generated or costs saved by the use
of covered intangibles”. Sec. 1.482-7(e)(1), Income Tax Regs.
If parties fail to share such costs in proportion with their
benefits, respondent is authorized to make allocations “to the
extent necessary to make each controlled participant’s share of
the costs * * * equal to its share of reasonably anticipated
benefits”. Sec. 1.482-7(a)(2), Income Tax Regs.
II. Are the Spread and Grant Date Value Costs for Purposes of
Section 1.482-7, Income Tax Regs.?
Intangible development costs are defined as “all of the
costs incurred * * * related to the intangible development area
* * * [which] consist of the following items: operating expenses
as defined in * * * [section] 1.482-5(d)(3), other than
depreciation or amortization expense”. Sec. 1.482-7(d)(1),
Income Tax Regs. Operating expenses are defined as “all expenses
not included in cost of goods sold except for interest expense,
foreign income taxes * * *, domestic income taxes, and any other
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