Taxpayers that have relied on cost sharing arrangements under
the 1996 regulations must consider whether and how such reliance
will be viable in the future under the new regulations.
Overview
On December 31, 2008, the U.S. Treasury Department and the
Internal Revenue Service (IRS) issued temporary regulations making
fundamental changes to the 1996 rules governing qualified cost
sharing arrangements (CSAs). These changes are relevant not only to
taxpayers that rely on CSAs, but also to taxpayers that have never
implemented a CSA, as Treasury and the IRS have provided for
application of the principles of the new regulations to intangible
development arrangements in general.
The new regulations are based on regulations proposed in 2005,
which have been the subject of considerable discussion and
controversy. The new regulations are generally effective as of
January 5, 2009, subject to limited transition relief for certain
pre-existing CSAs. The new regulations also
