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Valuation of Intangibles


Product Code - TMA84
Speaker(s): Ednaldo Silva, Ph.D., RoyaltyStat
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 Since the early 1960s, the migration of intangibles from U.S. R&D activities to related offshore subsidiaries has been a major concern of U.S. tax policy. The destination of intangible migration has since shifted to Ireland and other lower tax jurisdictions, but the resulting tax issues have not been resolved.

A major issue of contention between legislators, the IRS, and corporate tax professionals is the valuation of these intangibles, for which the IRS has promulgated several specified methods – none of which can find comparable “super royalty” rates for high profit potential intangibles. Valuation of Intangibles, a new webinar from Bloomberg BNA, focuses on the problems that the IRS and corporate professionals face when confronted with transfer pricing (arm’s length) principles based on comparables and the challenge to find comparables to evaluate the migration of high profit potential intangibles.

In 60-90 minutes, the webinar will cover:

  • Transferring Intangibles: A Regulatory Context
  • The Arms length Standard
  • Definition of Intangible Property
  • Pricing Methods
  • Comparable Uncontrolled Royalty Rates – Scenario and Example
  • Comparable Uncontrolled Royalty Rates Under the CPM
  • Lump-Sum Royalty Payment
  • Equivalent Royalty Amount
  • Calculation of the Equivalent Royalty Amount
  • Sensitivity Analysis of the Income Method
  • Periodic Adjustment
  • Enhancement to the Intangible

Presentation Objectives

Registrants attending this webinar will be able to:

  • Understand the comparable royalty rates under the CUT method
  • Know the manufacturing markup and distribution margin under the Residual Profit Split Method
  • Forecast royalties, and incorporate upfront fees and milestone payments under the Present Value Method
  • Communicate complex transfer pricing pitfalls to clients interested in intangible migration

Ednaldo Silva, Ph.D., RoyaltyStat

 Ednaldo Silva is a transfer pricing economic consultant based in Washington, DC. Prior to starting RoyaltyStat, Ednaldo was chief tax economist at the international law firm Shearman & Sterling, and before that he was senior economic advisor the IRS Office of Chief Counsel. Ednaldo participated in the drafting of the 1994 transfer pricing regulations, and introduced the comparable profits method when he was an audit economist in Manhattan. Ednaldo introduced several other innovations in transfer pricing practice, including the concept of “best method” based on statistical reliability principles, and the use of quartiles and Tukey’s filter to deal with pervasive outliers among operating profit indicators of potential comparables. Ednaldo was the first economist in the APA program, which was used as a nursery school for application of the comparable profits method. Ednaldo has extensive experience as a tax economics expert, having represented the IRS and corporate clients in several major transfer pricing litigation.