A leading high-technology materials and derivative precision components company engaged VRC to determine appropriate arm’s length royalty rates for intellectual property under U.S. IRC § 482 for Transfer Pricing. The project required identification of economic ownership, by reporting unit, of a number of intellectual property transactions between the U.S. parent company and the individual reporting units domiciled overseas, as well as transactions between the individual reporting units. The challenges for VRC were to 1) investigate global market licensing transactions of intellectual property within a narrow technology industry, 2) investigate and identify intercompany technology transfers, and 3) support the appropriate conclusions against heightened IRS scrutiny.


VRC collaborated with company management and conducted a detailed analysis of the intellectual property and the functions and risks related to each of the corresponding reporting units and the respective IP transactions in order to establish economic licensee and licensor relationships. In the final analysis, the determined arm’s length ranges of royalty rates provided a supportable basis for transfer prices between the Company’s U.S. (parent) reporting unit and multiple overseas domiciled subsidiaries.

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