IP Holding Structure Checklist: Entity and Ownership Mapping, Transfer Documentation, Royalty Terms, Substance and Recordation, and Audit Files

By Casey Scott McKay · 2024-04-19

This checklist tests whether an intellectual property ownership structure is supported by the documents that actually exist, which is the question every examination, diligence exercise, and standing challenge eventually asks. It works through the entity and ownership map, the chain of title remediation that must precede any transfer, the executed assignments and recordations that a reorganisation memorandum cannot replace, the intercompany licence terms that make a royalty priceable and sourceable, and the substance indicators that determine whether the entity holding title is entitled to the return it claims. It then sets out the contemporaneous documentation file and the annual maintenance cycle. Gate items mark the points where a migration should stop. The traps are administrative: the unexecuted transfer, the unscheduled licence, the unrecorded assignment, the unexercised quality control, and the structure nobody has reviewed since it was built.

IP and Technology > IP and IT in Corporate Transactions | Checklist | Published 19 April 2024 - Updated 22 February 2025 | Casey Scott McKay - marksy.us

Summary. This checklist tests whether an intellectual property ownership structure is supported by the documents that actually exist, which is the question every examination, diligence exercise, and standing challenge eventually asks. It works through the entity and ownership map, the chain of title remediation that must precede any transfer, the executed assignments and recordations that a reorganisation memorandum cannot replace, the intercompany licence terms that make a royalty priceable and sourceable, and the substance indicators that determine whether the entity holding title is entitled to the return it claims. Gate items mark the points where a migration should stop.

Keywords: IP holding company checklist · entity mapping · chain of title · assignment recordation · intercompany licence · royalty base · transfer pricing documentation · DEMPE substance · quality control · section 367(d) · cost sharing arrangement · withholding tax · encumbrances · functional analysis · annual maintenance

How to use this checklist

| Phase | What it establishes | Who runs it | Gate | |---|---|---|---| | 1. Entity and ownership map | What is owned, by whom, where | IP counsel | Map complete before any transfer | | 2. Chain of title remediation | Whether title is clean enough to move | IP counsel | Gaps fixed before migration | | 3. Encumbrances and consents | What blocks a transfer | Corporate and IP counsel | Consents obtained before execution | | 4. Transfer documentation | Whether the transfer actually happened | IP counsel | Executed and recorded, not resolved | | 5. Intercompany licence | Whether the royalty can be priced and sourced | IP and tax counsel | Schedule and territory allocation present | | 6. Substance | Whether the owner performs functions | IP counsel and the business | Protection function located with title | | 7. Quality control | Marks protected; maintenance evidenced | Brand and IP counsel | Programme operating, not merely drafted | | 8. Documentation file | Whether an information request can be answered | Tax and IP counsel | Assembled before filing, not after audit | | 9. Annual maintenance | Whether the structure still matches the business | Named owner | Calendar and trigger events agreed |

The matter. A group with United States, Irish, and Polish entities reorganised four years ago so that the Irish subsidiary would own the software and the marks. The reorganisation was documented by a board memorandum. Since then the group has made two acquisitions, moved most development to Poland, and defended an infringement action in Germany instructed and paid for by the United States parent. The tax team has received an information request. Nobody has looked at the portfolio schedule since the reorganisation, and the marks in six countries are still registered in the name of the former owner.

Phase 1. Build the entity and ownership map

[ ] List every entity in the group, with jurisdiction of incorporation, function, headcount, and whether it holds any intellectual property.
[ ] Schedule every registered right by jurisdiction: patents and applications by family, trademarks by mark and class, registered designs, and copyright registrations. Record number, status, owner of record, and renewal or expiry date.
- Trap. The owner of record and the intended owner diverge quietly. Check the register, not the internal system.
[ ] Add the unregistered rights: trade secrets, unregistered marks, copyright in code and content, and know-how.
[ ] Add the assets nobody schedules: domain names, social media handles, app store accounts, developer accounts, and code repositories.
- Trap. These are routinely held in an individual's personal account and discovered during a transaction.
[ ] Record who uses each asset and where, because use drives royalty sourcing under 26 U.S.C. § 861 and trademark use evidence simultaneously.
[ ] Record where the people are. Inventors and authors by employer and location; the team that instructs prosecution; the team that decides enforcement.
- Why. This is the input to the functional analysis, and it is the fact most often assumed rather than checked.
[ ] [Gate] Do not transfer anything before the map is complete. A migration inherits every defect it does not fix.

Phase 2. Remediate the chain of title

[ ] Verify an executed assignment exists for every transfer in the chain, from inventor or author to the current owner of record.
[ ] Confirm inventor and author assignments are effective under the law where they were employed.
- Trap. A United States-style present assignment may be ineffective or subject to mandatory remuneration rules in several jurisdictions, and the defect surfaces only when the right is asserted.
[ ] Check for entities that no longer exist. A registration standing in the name of a dissolved company requires a corrective chain, and some offices will not accept a filing until it is fixed.
[ ] Confirm copyright transfers are in a signed writing as 17 U.S.C. § 204 requires, and note any grants approaching the termination windows in 17 U.S.C. § 203 or 17 U.S.C. § 304.
[ ] Verify work made for hire treatment where relied on, against the categories in 17 U.S.C. § 101, and obtain assignments where it does not apply.
[ ] Check inventorship on the patents that matter. An inventorship error is correctable under 35 U.S.C. § 256 where there was no deceptive intent, and an uncorrected one can create an unrecorded co-owner with the power to licence.
[ ] [Gate] Fix every gap before the migration, because transferring defective title moves the problem without solving it and adds a step to the chain.

Phase 3. Identify encumbrances and required consents

[ ] Search for security interests. Article 9 financing statements in the debtor's jurisdiction, plus federal recordation at the Patent and Trademark Office and the Copyright Office under 17 U.S.C. § 205.
- Why. A security interest survives the transfer, and moving encumbered assets without consent is usually an event of default.
[ ] Read every inbound licence for anti-assignment and change of control terms.
- Trap. In-licensed technology frequently cannot be transferred intra-group without consent, and the discovery usually follows the announcement.
[ ] Read every outbound licence for terms that bind the rights: exclusivity, territory, most favoured nation clauses, and provisions requiring notice on assignment.
[ ] Identify co-existence and settlement agreements that restrict use or registration of a mark, because they travel with the right.
[ ] Check government funding obligations. Federally funded inventions carry Bayh-Dole obligations — election of title, government licence, and United States manufacturing preferences — that persist regardless of ownership.
[ ] Identify pending proceedings: litigation, oppositions, cancellations, and post-grant reviews. Each needs an assignment or a substitution of party.
[ ] [Gate] Obtain every required consent before executing anything.

Phase 4. Execute and record the transfer

[ ] Prepare assignments naming specific rights, with numbers, dated, with consideration recited, and signed by a person with authority.
- Trap. A board resolution or a reorganisation memorandum is not an assignment, and this is the most common structural defect found on examination.
[ ] For trademarks, ensure the assignment carries the goodwill of the business symbolised by the mark, as 15 U.S.C. § 1060 contemplates.
- Why. A mark cannot be assigned in gross, and an intra-group transfer of registrations unaccompanied by any business invites the argument.
[ ] Record in the United States. 35 U.S.C. § 261 makes an unrecorded patent assignment void against a subsequent bona fide purchaser without notice; 15 U.S.C. § 1060 does the same for marks; and copyright recordation is available under section 205.
[ ] Record abroad, tracking each jurisdiction's requirements: notarisation, legalisation, translation, and evidence of the underlying transaction.
- Trap. Recordation lead times range from days to many months. A tax effective date chosen without them produces documents filed long after the event.
[ ] Notify foreign associates and change correspondence addresses, so instructions and renewal notices flow to the new owner from the transfer date.
[ ] Assign pending proceedings and update the docketing system.
[ ] Price the outbound transfer under 26 U.S.C. § 367(d), and have the intellectual property team review the useful life and scope assumptions against the file rather than accepting them from the valuation.
[ ] [Gate] Confirm every assignment is executed and every recordation is filed or confirmed before the structure is treated as operative.

Phase 5. Draft the intercompany licence properly

[ ] Attach a portfolio schedule with numbers and jurisdictions, and a mechanism for adding rights as they are granted or acquired.
- Why. A grant of "all intellectual property" cannot be priced, sourced, or enforced.
[ ] Allocate territory expressly, because royalty sourcing under 26 U.S.C. § 861 and 26 U.S.C. § 862 follows the place of use.
[ ] Define the royalty base: which products, which deductions, and how bundles, services revenue, and mixed products are treated.
[ ] Support the rate with a benchmarking study or a profit split, retained with working papers, meeting the arm's length and commensurate-with-income requirements of 26 U.S.C. § 482.
[ ] Specify exclusivity, field of use, and sublicensing rights, noting that a licence exclusive in substance may transfer all substantial rights and change the character of the transaction under 26 U.S.C. § 1235.
[ ] Include quality control terms for marks: standards, approval, inspection, and records.
[ ] Allocate withholding tax and require the documentation supporting any treaty rate under 26 U.S.C. § 1441 and 26 U.S.C. § 894.
[ ] Address improvements: who owns what the licensee develops, and on what terms it flows back.
[ ] Provide for termination and reversion, so a later restructuring does not strand rights.
[ ] Confirm the royalty is actually invoiced and paid, not merely accrued.
- Trap. Unsettled intercompany royalties are a recurring examination finding and are trivially avoidable.
[ ] [Gate] No licence without a schedule and a territorial allocation.

Phase 6. Test and build the substance

[ ] Identify who performs each DEMPE function — development, enhancement, maintenance, protection, and exploitation — by name, role, employer, and location.
- Why. Under the OECD framework returns follow functions and risk control rather than legal title, and an entity that holds title while performing nothing earns a funding return.
[ ] Locate the protection function specifically. Who instructs prosecution, who decides abandonment, who instructs litigation, and who accepts settlements.
- Trap. This almost always sits with the operating company's in-house team, contradicting the structure, and the correspondence file proves it.
[ ] Confirm the owner has people or a genuine services agreement, with defined scope, arm's length pricing, and actual performance.
[ ] Confirm the owner has a bank account, a budget, and a board that records real decisions, not ratifications of decisions taken elsewhere.
[ ] Confirm the owner pays the prosecution and renewal invoices, funds the litigation, and receives the proceeds.
[ ] Confirm foreign associates are instructed in the owner's name, by someone employed or engaged by it.
- Why. This single item is checked in nearly every examination.
[ ] Assemble a substance file: people, decisions, money, instructions, contracts, and records. Update it annually.
[ ] [Gate] Either relocate the protection function to match the title, or relocate the title to match the function. A structure in which they diverge is priced against the taxpayer.

Phase 7. Operate the quality control programme

[ ] Issue written standards covering the goods and services offered under the licensed marks.
[ ] Exercise approval rights over materials, packaging, and marketing, and keep the approvals.
[ ] Inspect, on a defined cycle, with findings recorded and follow-up documented.
[ ] Retain the records.
- Why. A licensor that does not control quality risks abandonment for naked licensing under 15 U.S.C. § 1127 — a catastrophic loss arising from an administrative omission — and the same failure removes the maintenance function from the entity claiming it.
[ ] Confirm use evidence is attributable to the filing entity. Specimens must show use by the owner or by a controlled licensee, and a holding company that neither uses nor controls cannot support a declaration of use.
[ ] [Gate] Confirm the programme is operating, not merely drafted. A quality control clause with no inspection record is worse than none, because it evidences awareness without action.

Phase 8. Assemble the documentation file

[ ] The master file and local file required under the OECD documentation framework, describing the group, the intangibles, the intercompany financial arrangements, and the local entity's transactions.
[ ] The country-by-country report, and a candid look at how the structure appears on it.
- Trap. An entity with substantial profit, two employees, and no tangible assets is visible immediately, which is the point of the requirement.
[ ] The functional analysis, reviewed and corrected by the intellectual property team before filing.
- Why. It is written by people who do not know who instructs the foreign associates, and it is the document that decides the outcome.
[ ] The benchmarking study with comparables, rejections, and adjustments.
[ ] The executed intercompany agreements, matching what actually happens.
[ ] The substance file from Phase 6 and the quality control record from Phase 7.
[ ] The four-number reconciliation: transfer pricing rate, valuation, litigation damages position, and any negotiation number, with the differences explained in a paragraph.
- Why. All four are discoverable and comparable, and inconsistency is found quickly.
[ ] [Gate] Confirm the file is assembled before the return is filed, because contemporaneous means before the request, not after it.

Phase 9. Maintain it annually

[ ] Update the portfolio schedule and re-attach it to the licence.
[ ] Confirm every new registration and application stands in the correct name, and record any assignments outstanding.
[ ] Recalculate, invoice, and settle the royalties.
[ ] Recalculate cost sharing benefit shares where an arrangement under 26 C.F.R. § 1.482-7 exists, and bring in any intangibles acquired during the year with a documented platform contribution.
[ ] Refresh the benchmarking study on the agreed cycle.
[ ] Perform and document the quality control inspections.
[ ] Update the substance file and re-run the functional analysis if anything material changed.
[ ] Reconcile the four numbers.
[ ] Trigger a full review on any of: an acquisition; a relocation of research or development; a change in who instructs prosecution or enforcement; a new product line or business model; a material change in tax law; a financing or impairment test; or a dispute in which the portfolio's value is asserted.
[ ] [Gate] Name the person who owns this cycle.
- Why. In most groups the structure belongs to tax, the portfolio belongs to legal, and the maintenance belongs to nobody — which is why good structures decay into indefensible ones without anyone deciding that they should.

Outcome. At the end of this checklist a group should be able to show, from documents that already exist: what it owns and where; that title is clean and every transfer was executed and recorded; that no encumbrance or consent was overlooked; that the intercompany licence schedules the portfolio, allocates territory, defines the base, and supports the rate; that the entity holding title instructs prosecution, decides enforcement, pays the bills, and receives the proceeds; that quality control is exercised and recorded; that the documentation file is complete and internally consistent; and that someone reviews all of it every year. A group that can show those things answers an information request in a week. A group that cannot has a memorandum describing a transaction that, on the file, never happened.

Phase 10. Asset-specific screens

[ ] Patents. Confirm inventor assignments are effective where the inventors are employed; confirm pending applications transferred as well as granted patents and that the prosecution record reflects it; and identify any federally funded subject inventions carrying Bayh-Dole obligations that travel with the invention.
[ ] Trademarks. Confirm goodwill accompanied every assignment; confirm quality control is exercised over every licensee; confirm specimen and declaration filings are attributable to the owner or a controlled licensee; and confirm no registration is stranded in a dissolved or renamed entity.
- Trap. This is the asset class where structural failure is most damaging, because abandonment is permanent and the underlying error is administrative.
[ ] Copyright. Confirm signed writings under 17 U.S.C. § 204; maintain registrations, because they condition statutory damages and fees under 17 U.S.C. § 412; and diarise any grants approaching the termination windows.
[ ] Trade secrets. Confirm the entity claiming ownership actually controls access and imposes the obligations, because the reasonable measures analysis under 18 U.S.C. § 1839 locates the asset where the controls are, and a transfer to an entity whose people have never had access transfers nothing.
[ ] Software. Run an open source scan before the migration; identify third-party components whose licences restrict transfer; and confirm repository and account ownership sits with the entity rather than with an individual.
[ ] Data. Confirm the rights to use and transfer datasets, including any consent, contractual, or data protection restrictions that make a transfer unlawful regardless of what the assignment says.
[ ] Domains, handles, and accounts. Confirm registrant details, control of the registrar account, and that no asset sits in a personal account.

Phase 11. Diagnosing an existing structure

Most engagements begin years after the structure was built. Run this before proposing anything.

[ ] Pull the register entries for the twenty most valuable rights and compare the owner of record with the intended owner.
- Why. This single test, which takes an afternoon, identifies the problem in most groups.
[ ] Ask for the executed assignments and note how many exist.
[ ] Ask who instructed the last three foreign filings and the last enforcement action, and check the correspondence.
[ ] Ask when the licence schedule was last updated, and compare it against the current product line.
[ ] Ask for the last quality control inspection report.
[ ] Ask whether the intercompany royalty was invoiced and settled in cash for the last three years.
[ ] Ask for the functional analysis and read it against what the group actually does.
[ ] Compare the transfer pricing rate against any damages position, valuation, or negotiation number used in the same period.
[ ] [Gate] Report the findings before proposing remediation, and separate what is fixable prospectively from what is not.
- Why. Fix prospectively, document honestly, and date correctly. Retroactive documents are worse than late ones, and an examiner presented with an honest remediation is in a very different frame of mind from one presented with an assignment backdated to make a memorandum true.

Phase 12. Working the matter in the opening example

Applied to the group described above, the checklist produces a short list and a clear sequence.

[ ] The register check is first, and it produces the largest finding: marks in six countries still stand in the name of the former owner, so the Irish entity does not own them and cannot support either the royalty or a declaration of use.
[ ] The assignments do not exist. A board memorandum recorded the decision; nothing was executed. Every subsequent step in the structure rests on a transfer that, on the file, never occurred.
[ ] The functional analysis is wrong on protection. The German action was instructed and paid for by the United States parent, which locates the protection function there regardless of title.
[ ] Development moved to Poland after the reorganisation, which relocates the development function and was never reflected in any document.
[ ] The two acquisitions brought portfolios in that are not on the schedule, not in the licence, and — probably — still registered to the acquired entities.
[ ] So the remediation, in order. Execute and record assignments for everything, including the acquired portfolios, dated now and described honestly. Attach a current schedule to the licence with territorial allocation. Relocate the protection function to the title holder, or accept it sits elsewhere and re-price. Put the Polish development on a contractual footing that describes what that entity actually does and bears. Start the quality control programme. Rebuild the functional analysis on the real facts. Reconcile the transfer pricing rate against the last valuation.
[ ] And answer the information request on the true position, with the remediation documented and dated. That is a materially better answer than a defence of a structure the file does not support.

Phase 13. The documents this checklist should leave behind

[ ] An entity and ownership map, refreshed annually.
[ ] A portfolio schedule, attached to the licence and current.
[ ] A chain of title file with executed assignments and recordation confirmations for every link.
[ ] An encumbrance and consent register.
[ ] An intercompany licence with schedule, territory, base, rate support, quality control, withholding allocation, improvements, and reversion.
[ ] A benchmarking study with working papers.
[ ] A functional analysis corrected by the intellectual property team.
[ ] A substance file: people, decisions, money, instructions, contracts, records.
[ ] A quality control record: standards, approvals, inspections, follow-up.
[ ] A four-number reconciliation with the differences explained.
[ ] A maintenance calendar with a named owner and defined trigger events.

Eleven documents. Together they represent a few days of work a year, and they are the difference between answering an information request in a week and spending two years assembling a defence of something nobody documented at the time.

A note on proportion

A single-entity business owning its own portfolio needs none of this. One owner, one register, no intercompany anything.

The threshold is multi-entity plus a portfolio worth centralising. At that point the questions arrive whether or not anyone asks them, and the only choice is whether the answers are documented deliberately or reconstructed under pressure.

Run Phases 1, 2, and 4 in every group regardless of tax structure. The map, clean title, and executed and recorded transfers are portfolio hygiene, not tax planning, and they are worth doing for their own sake — which is the argument most likely to get them funded.

Phase 14. A migration timetable

[ ] Weeks one and two. Build the map and the schedule. Identify encumbrances, anti-assignment terms, pending proceedings, and required consents.
[ ] Weeks three and four. Remediate the chain of title. Fix missing inventor assignments, unrecorded prior transfers, and entities that no longer exist.
[ ] Week five. Obtain valuations, and have the intellectual property team check useful life against real expiry dates adjusted for term adjustment, extension, and terminal disclaimers, and check scope against the claim charts.
[ ] Weeks five to seven. Execute assignments and the intercompany licence together, effective from the same date.
[ ] Weeks seven to twenty. Recordation, tracked to confirmation in every jurisdiction. Notify associates, change correspondence addresses, update docketing, and substitute parties in pending proceedings.
[ ] Weeks twenty to twenty-four. Build the substance file, the functional analysis, and the documentation set. Reconcile the four numbers. Set the maintenance calendar and name its owner.
[ ] Throughout. Keep the working file — board papers, business case, valuations, and correspondence — because "why does this structure exist" is the first question in every examination and the contemporaneous answer is worth far more than a later reconstruction.
[ ] [Gate] Do not let the effective date be fixed before the recordation lead times are known. This single sequencing error produces most of the documentation failures in this area.

Phase 15. Interfaces with other functions

[ ] Tax. Ask to see the functional analysis in draft, supply the four facts it always gets wrong — where the inventors are employed, who instructs prosecution and enforcement, what the portfolio actually covers, and the real remaining term — and give an honest recordation timetable before the effective date is chosen.
[ ] Treasury and finance. Confirm the intercompany royalty is invoiced and settled in cash, that withholding is applied and documented, and that the licence's payment terms match what the ledger shows.
[ ] Corporate development. Ensure every acquisition triggers a portfolio addition: registrations transferred into the structure, the schedule updated, and any cost sharing platform contribution documented at the time.
[ ] The business. Ensure new brands, products, and code are filed and registered in the correct entity from the outset, which is far cheaper than transferring them later.
[ ] External counsel. Ensure engagement letters, invoices, and instructions run to and from the entity that owns the rights.
[ ] Insurance and audit. Confirm the structure is reflected in the group's representations, and that any impairment or valuation exercise uses assumptions consistent with the transfer pricing file.
[ ] [Gate] Confirm that at least one person sees all of these interfaces. The characteristic failure of this area is that each function performs its part correctly and no one holds the whole.

A closing note

Nothing in this checklist requires specialist tax knowledge. It requires executing what was approved, recording what was executed, scheduling what was licensed, instructing in the name of the owner, and inspecting what was promised.

Those five habits are ordinary portfolio hygiene, and a group that maintains them will find that its tax structure is supported almost incidentally — by documents produced for entirely different reasons.

A group that does not maintain them will find the reverse: that a defensible plan, sound reasoning, and a sensible entity are all undone by a folder that contains a memorandum where an assignment should be.

Phase 16. Questions to put to the group

[ ] "Show me the assignment." For the three most valuable rights. If the answer is a memorandum, that is the finding.
[ ] "Who signed the last instruction to our Japanese associate?" The name and the employer answer the protection question faster than any analysis.
[ ] "When was the licence schedule last updated?" If it predates the current product line, the licence does not cover what the business sells.
[ ] "When did we last inspect a licensee?" If never, there is both a naked licensing exposure and a maintenance-function problem.
[ ] "Was last year's royalty paid in cash?" An accrued and unsettled intercompany royalty is a standard finding and an avoidable one.
[ ] "What did we say the portfolio was worth, to whom, in the last three years?" Transfer pricing, valuation, damages, and negotiation. Four numbers, one portfolio.
[ ] "Who owns this file?" If nobody can answer, that is the most important finding in the exercise, and every other defect follows from it.

[ ] "What happens to the rights if this entity is wound up or sold?" The agreements should say, and in most groups they do not, which turns a routine restructuring into a title problem years later.
[ ] "Which of our registrations are in the name of a company that no longer exists?" The answer is almost never zero, and each one will block a renewal or an enforcement action at the least convenient moment.
[ ] "Who at the owning entity has authority to abandon a family?" If the answer is that abandonment decisions are taken by the operating company's budget process, the maintenance function sits there too.

[ ] "Do our specimens show use by the entity that filed them?" For a holding company that neither sells nor controls, the honest answer is no, and a declaration of use signed on that footing is a problem of a different and more serious kind.
[ ] "What did we tell our auditors, our insurers, and our last investor about this portfolio?" Those three statements are also part of the four-number problem, and they are made by people who have never read the intercompany licence.

[ ] "If we had to prove ownership tomorrow, in a court, of the mark on our best-selling product, what would we hand up?" The answer to that question is the answer to all of them, and a group that cannot produce a chain of executed and recorded assignments on demand has a property problem long before it has a tax problem.

[ ] "And who would sign the declaration supporting it?" Somebody has to know the facts personally, and if no employee of the owning entity can say where the rights came from, that entity is holding paper it cannot speak to.

[ ] "When did anyone last read the intercompany licence?" In most groups the honest answer is that nobody has read it since it was signed, and reading it is the cheapest diagnostic available in this entire checklist.

Key Authorities at a Glance

| Authority | Proposition | Where it bites | |---|---|---| | 26 U.S.C. § 482 | Arm's length; commensurate with income | Phase 5 | | 26 C.F.R. § 1.482-4 | Intangible pricing methods | Phase 5 | | 26 C.F.R. § 1.482-7 | Cost sharing arrangements | Phase 9 | | 26 U.S.C. § 367(d) | Outbound intangible transfers | Phase 4 | | 26 U.S.C. § 951A | GILTI | Phase 1 | | 26 U.S.C. § 250 | FDII deduction | Phase 1 | | 26 U.S.C. § 59A | BEAT | Phase 5 | | 26 U.S.C. § 861 | Royalty sourcing by place of use | Phases 1 and 5 | | 26 U.S.C. § 862 | Foreign source royalties | Phase 5 | | 26 U.S.C. § 1441 | Withholding on royalties | Phase 5 | | 26 U.S.C. § 894 | Treaty eligibility | Phase 5 | | 26 U.S.C. § 1235 | All substantial rights; capital gain | Phase 5 | | 26 U.S.C. § 197 | Fifteen-year amortisation | Phase 4 | | 26 U.S.C. § 174 | Capitalised research expenditures | Phase 1 | | 35 U.S.C. § 261 | Patent assignment recordation | Phase 4 | | 35 U.S.C. § 256 | Inventorship correction | Phase 2 | | 15 U.S.C. § 1060 | Trademark assignment and goodwill | Phase 4 | | 15 U.S.C. § 1127 | Abandonment; naked licensing | Phase 7 | | 17 U.S.C. § 204 | Copyright transfers in writing | Phase 2 | | 17 U.S.C. § 205 | Copyright recordation | Phases 3 and 4 | | 17 U.S.C. § 203 | Termination of transfers | Phase 2 | | 17 U.S.C. § 101 | Work made for hire | Phase 2 | | Altera Corp. v. Commissioner, 926 F.3d 1061 (9th Cir. 2019) | Stock compensation in the cost pool | Phase 9 | | Amazon.com, Inc. v. Commissioner, 934 F.3d 976 (9th Cir. 2019) | Pre-2017 intangible definition | Phase 4 | | Geoffrey, Inc. v. South Carolina Tax Comm'n, 437 S.E.2d 13 (S.C. 1993) | Economic nexus through marks | Phase 1 | | Mission Prod. Holdings, Inc. v. Tempnology, LLC, 587 U.S. 370 (2019) | Rejection does not terminate a licence | Phase 3 | | 11 U.S.C. § 365(n) | Licensee protections in bankruptcy | Phase 3 | | OECD BEPS Actions 8–10, DEMPE | Returns follow functions | Phase 6 | | OECD BEPS Action 13 documentation | Master file, local file, CbCR | Phase 8 |

The five things people get wrong

One: mistaking a memorandum for a transfer. A board paper records a decision; it does not move a property right. The structure then rests on an entity that owns nothing, and every consequence follows — no standing to enforce, no basis for the royalty, no support for the return. Execute assignments naming specific rights, and record them. It is a week of work and it is the entire foundation.

Two: the two-page licence. No schedule, no territorial allocation, no defined royalty base, and no quality control. It cannot be priced under section 482, it cannot be sourced under section 861, and it cannot be enforced against a third party without argument. The schedule and the territory allocation are the two provisions that do the work, and both are usually missing.

Three: leaving the protection function where it always was. Title moves to the holding company; prosecution instructions, abandonment decisions, and litigation continue to come from the operating company's in-house team. The functional analysis follows the conduct, and the conduct is documented in the correspondence file. Move the function or move the title.

Four: drafting quality control and never doing it. A licence clause with no inspection record simultaneously creates naked licensing exposure under section 1127 and demonstrates that the licensor performs no maintenance function. One operating programme — standards, approvals, inspections, records — solves both problems, and its absence creates both.

Five: building it once and never looking again. The structure was correct when built. Then came an acquisition, a relocation of development, a change in who runs enforcement, and a product line the licence does not mention. Name the owner of the annual cycle, because in most groups the structure belongs to tax, the portfolio belongs to legal, and the maintenance belongs to nobody at all.