The Reduced Impact of Sec. 367(d) After the TCJA


The transfer of intangible property by a domestic corporation to a CFC in an otherwise tax-free transaction generally is subject to taxation. Under section 367(d) the transferor is treated as receiving a royalty over the life of the intangible property commensurate with the income generated by the intangible property.

The TCJA expanded the scope of section 367(d) but also significantly reduced corporate tax rates. In addition, the TCJA taxes currently most of the income of CFCs (albeit at a lower tax rate), and provides a lower rate for intangible income earned by a domestic corporation from intangible property used outside the US.

In this article, Lowell D. Yoder explores the interaction of these changes to the international tax rules with the application of section 367(d) as expanded by the TCJA.

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