1200 stunting as Gaffe 1200

[Garrett Wollman]

<<On Sun, 12 Aug 2012 23:17:45 -0400, A Joseph Ross <joe@attorneyross.com> said:

> On 8/12/2012 10:15 PM, Garrett Wollman wrote:
>> Hmmm. Like many large companies, they appear to be using the 
>> "Intellectual property subsidiary" tax-avoidance dodge. How many 
>> states does that still work in? -GAWollman

> OK, what's an "intellectual property subsidiary."  Actually, I can guess 
> that it's a subsidiary corporation designed to hold the rights to 
> intellectual property, but what is it for?

For avoiding taxes.  The subsidiary is incorporated in a state that
does not tax royalty income (e.g., Delaware[1]), and all the other
parts of the company pay "licensing" fees to this subsidiary, which
historically counted as bona fide expenses and thus reduced the other
subsidiaries' tax liability.  States have started cracking down on
this, although I don't know exactly how -- presumably by excluding
such intracorporate transfers from expenses for tax purposes.

-GAWollman