Tax Court Ends the ‘Cascading Royalty’ Problem

86 Journal of Taxation 108 (February 1997)

5 Pages Posted: 10 Jul 2015

See all articles by Susan Jacobini Harrington

Susan Jacobini Harrington

KPMG International, LLP - New York, NY Office

Alan Appel

New York Law School

Harrison Jacob Cohen

KPMG LLP

Thomas North

KPMG, Netherlands

Date Written: February 1, 1997

Abstract

The Service’s assault on back-to-back royalties was dealt a serious blow by a recent Tax Court decision which suggests that royalties paid by one foreign person to another cannot ever be U.S.-source income even if the rights are licensed for use in the U.S. The court expressed concern with cascading royalties, in which multiple taxation might be imposed on the same royalty as it makes its way up a chain of sublicensees, and held that there was no indication that Congress intended that result.

Suggested Citation

Jacobini Harrington, Susan and Appel, Alan and Cohen, Harrison Jacob and North, Thomas, Tax Court Ends the ‘Cascading Royalty’ Problem (February 1, 1997). 86 Journal of Taxation 108 (February 1997), Available at SSRN: https://ssrn.com/abstract=2628215

Susan Jacobini Harrington

KPMG International, LLP - New York, NY Office

New York, NY 10154-0102
United States

Alan Appel (Contact Author)

New York Law School ( email )

185 West Broadway
New York, NY 10013
United States

Harrison Jacob Cohen

KPMG LLP ( email )

1801 K Street NW
Ste 12000
Washington, DC 20006
United States

Thomas North

KPMG, Netherlands

1070 DB Amsterdam
Netherlands

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