Where the Royalty Lands: IP Holding Companies, Transfer Pricing, and the Tax Shape of a Portfolio
By Casey Scott McKay ·
Where a company's intellectual property sits determines who is taxed on the income it produces, and for large portfolios that question is worth more than most litigation. This article explains the structures practitioners encounter: the separate IP holding company, the cost sharing arrangement, the offshore principal, and the state-level licensing entity. It sets out the rules that now govern them, including section 482 and the arm's length standard, the outbound transfer rules of section 367(d), and the GILTI and FDII regime introduced in 2017. It explains why the OECD analysis gives the return to the people who develop, enhance, maintain, protect, and exploit the asset rather than to the entity holding legal title. It looks at what the Amazon and Altera litigation actually decided and why state addback statutes ended the Delaware trademark holding company. And it explains why the intellectual property lawyer's documents are the evidence a tax authority examines first.
IP and Technology > IP and IT in Corporate Transactions | Article | Published 10 May 2026 - Updated 13 July 2026 | Casey Scott McKay - marksy.us
Summary. Where a company's intellectual property sits determines who is taxed on the income it produces, and for large portfolios that question is worth more than most litigation. This article explains the structures practitioners encounter — the separate IP holding company, the cost sharing arrangement, the offshore principal, the state-level licensing entity — and the rules that now govern them: section 482 and the arm's length standard, the outbound transfer rules of section 367(d), the GILTI and FDII regime, and the OECD's insistence that returns follow the people who develop, enhance, maintain, protect, and exploit the asset rather than the entity holding legal title.
Keywords: IP holding company · transfer pricing · section 482 · section 367(d) · cost sharing arrangement · DEMPE functions · GILTI · FDII · withholding tax · royalty sourcing · patent box · economic substance · state addback statutes · intangible migration · country-by-country reporting
This is premium Marksy content — the full document is available to subscribers.