Property, Sales, and Use Taxation of Custom and 'Canned' Computer Software: Emerging Judicial Guidelines
Article Abstract:
The review centers on judicial history pertinent to the property, use, and sales taxation of computer software. The Internal Revenue Service (IRS) considers computer software an intangible asset. For federal tax purposes it is impossible to use accelerated depreciation methods or take the investment tax credit. Exhibit I presents two non-taxable alternatives and a sales tax model. To avoid sales, use, and property taxes on the cost of computer software, taxpayers should argue: the transaction consists of a sale of a service, not a product, and the software is classified as an intangible asset. The problem is demonstrated in the discussion of two 1983 cases, Maccabees Mutual Life Insurance Company and Comptroller v. Equitable Trust Company.
Publication Name: Tax Executive
Subject: Business, general
ISSN: 0040-0025
Year: 1984
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Transfer Pricing: a Proposal for Intercompany Sales of Tangible Property
Article Abstract:
The proportionate return-on-investment augmentation model (PRAM) is presented as an alternative transfer pricing method. It aims to be used when disadvantages or other devices make them poor choices. PRAM views the issue as a profit-splitting problem, instead of a pricing problem. Emphasis is on income allocation, knowledge of Code Section 482 and examples of the limitations of commonly used pricing methods. A key trouble area is transactions with or between unrelated parties. Advantages of PRAM are viewed as reduction of Internal Revenue Service (IRS) audit time and improved tax planning for more corporations.
Publication Name: Tax Executive
Subject: Business, general
ISSN: 0040-0025
Year: 1984
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Keeping the Money at Home under Section 1033: Buying Replacement Property of Stock from Related Entities
Article Abstract:
Keeping profits 'at home' refers here to reinvestment by a company in a related entity. This review delineates the obstacles to qualifying replacement property or stock of related entities under Internal Revenue Code Section 1033. Acquisition of property is examined closely. Three types are described: 1) acquisition from controlling stockholders, 2) acquisition from controlled corporations, and 3) acquisition from other related entities. Other areas discussed are: acquisition of stock, timing of property acquisition, and basis of replacement stock as its cost.
Publication Name: Tax Executive
Subject: Business, general
ISSN: 0040-0025
Year: 1984
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