The EdgarStat Blog explores issues in transfer pricing and application of the transactional net margin method (TNMM or CPM in the US) and other enterprise profit-based methods. Blog writings reflect the position of the authors and are not the opinion of EdgarStat.
Licensees bear significant commercial risk when they use valuable intangible assets owned by another entity. As such, any method that affords them with an expected return to its tangible assets that is only as high as the overall enterprise’s cost of capital is inconsistent with sound economics.
Topics: Intangibles Medtronic Royalty Rates Tax Controversy Section 482 TNMM/CPM US Transfer Pricing
Read moreThis discussion presents a simplified illustration of the issues with respect to the unspecified method applied in Medtronic III in contrast to the IRS' extreme CPM approach and a traditional RPSM approach based on sound financial economics.
Topics: Residual Profit Split Method Unspecified Method Intangibles Medtronic Tax Controversy Tax Policy Section 482 US Internal Revenue Service TNMM/CPM US Transfer Pricing
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