On Monday, March 12, 2012, Jerald David August presented at the American Law Institute CLE Webcast Event, "Cost-Sharing Agreements: New Treasury Regulations"
In December, 2011, the Treasury issued final, temporary and proposed regulations on the transfer pricing implications and guidelines involving cost-sharing agreements (CSAs). The new regulations carry over a substantial portion of the 2009 temporary and proposed regulations (TD 9441) and adopt guidance included in the temporary regulation on the comparable uncontrolled transaction method. A CSA is an arrangement by which the participants agree to share the cost of developing one or more intangibles ("cost-sharing intangibles"). The regulations follow on the heels of several significant court cases such as Veritas Software Corp. v. Comm'r, 133 T.C. 297 (2009) and Xilinx Inc. v. Comm'r, 125 T.C. 37 (2005). The new CSA regulations play a key and critical role in the tax accounting process involving multi-national business operations in the development of intangibles and similar assets.