IRS Issues Final Rules On Intangible Property Repatriations

With the allure of tax incentives for foreign derived intangible income and an increase in foreign audits scrutinizing transfer pricing, bringing intellectual property (IP) back to the United States is increasingly attractive. Newly issued final IP repatriation regulations make the tax consequences of repatriating previously offshored IP more predictable and eliminate the risk of potential double taxation.

On October 10, 2024, the US Department of the Treasury and the Internal Revenue Service (IRS) released final regulations under § 367(d) regarding the tax consequences of certain IP repatriations. The final regulations largely follow the proposed regulations issued in May 2023, with minor modifications. These regulations apply to IP repatriations that occur on or after October 10, 2024.