Xilinx Inc. and Subsidiaries - Page 24

         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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Last modified: May 25, 2011