Tax Litigation Developments

Last month, the First Circuit Court of Appeals affirmed the Tax Court's decision in TBL Licensing LLC v. Commissioner holding that a reorganization resulting in the outbound transfer of intangible property (IP) led to immediate recognition of the gain in the transferred IP under section 367(d). See No. 22-1783 (1st Cir. Sept. 8, 2023), aff'g 158 T.C. No. 1 (2022). The dispute in TBL Licensing arose in connection with a restructuring that took place after the 2011 merger of VF Corporation (VF) and The Timberland Company (Timberland). Roughly $1.5 billion of Timberland's value was attributable to its IP. After the merger, TBL Licensing LLC (TBL), a domestic corporation for federal income tax purposes and an indirect wholly owned subsidiary of VF, owned the Timberland IP. The transaction at issue here was an F reorganization, which the parties agreed involved a transfer of the Timberland IP to a related foreign corporation and thus that section 367(d) applied. But the