The IRS recently issued regulations (T.D. 9630) affecting how the differential income stream approach applies to cost-sharing agreements. Nearly two years ago, “final” cost-sharing rules were published under Sec. 482. This newer round of regulations is intended to ensure that cost-sharing agreements are in line with Sec. 482’s commensurate-with-income principle. In its earlier attempt to guarantee pricing practice in all cost-sharing agreements, the IRS instituted the income, acquisition price, and market capitalization methods. The motives of the IRS and a summary of the new regulations are provided by Sally Schreiber, senior editor at the Journal of Accountancy, along with links to the official IRS release.
[toggle style=”closed” title=”T.D. 9630 PDF”]https://s3.amazonaws.com/public-inspection.federalregister.gov/2013-20786.pdf [/toggle]
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