My foreign company owns the brand and charges my US LLC a royalty — how do I set it, and what is 'commensurate with income'?
My home-country company owns the trademark and some software, and licenses them to my US LLC for a royalty. The US LLC is also spending heavily on US marketing to grow the brand here. How do I set a defensible royalty rate, and I keep seeing this 'commensurate with income' rule that supposedly lets the IRS change the royalty in later years. Does that really mean a rate I set today can be revised if my US sales take off?
Related Questions
My US LLC buys finished goods from my foreign company and resells them — which IRC 482 method do I use, resale price or CPM?
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My US LLC does routine production for my foreign company — is cost-plus or CPM the right method?
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What interest rate do I have to charge on a loan from me (the foreign owner) to my US LLC?
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Can my foreign company charge my US LLC for bookkeeping and IT support at cost with no markup?
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Which services are NOT allowed under the Services Cost Method? Where is the line for 'cost-only'?
I understand the Services Cost Method lets me charge some intercompany services at cost. But I want to charge my US LLC for a bunch of things my home-country team does — some of it is bookkeeping and ...
I'm selling my US rental on a payment plan — can I spread the tax with the installment method?
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What is IRC 482 transfer pricing and can the IRS reallocate income between my foreign company and my U.S. LLC?
I own a software company in Ireland and a separate LLC in Delaware. My Irish company licenses software to the U.S. LLC, which sells it to U.S. customers. My CPA warned me about IRC 482 'transfer prici...
What is the 'material profit and loss statement' rule and does my small LLC have to worry about it?
Reading the section 6038A regs, I keep hitting this 'material profit and loss statement' concept with thresholds like $25 million and $100 million. My LLC does maybe $200k a year. Do these rules apply...
My LLC sale includes an earnout based on future revenue — is that still capital gain from abroad?
I'm selling my US LLC (it owns a software product and the brand). The deal is a fixed payment at closing plus an earnout: a percentage of the product's revenue for the next three years. I assumed the ...
I picked an AFR rate for my owner loan — but could the IRS still say it's really equity, and does section 163(j) limit my interest deduction?
I set my owner-loan interest inside the AFR safe-haven, so I assumed the interest question was settled. Then I read that even with a good rate the IRS can recharacterize the 'loan' as equity, and that...
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