Summary of Federal Laws

 

Tax

 

Miscellaneous Tax Issues

 

Research and Contracts

 

An audit would include a look at research activities for private inurement, private benefit and unrelated business income.  A determination will be made as to whether the research conducted is in fact research or is merely an activity incident to commercial enterprise.  An audit would also include a look at the conflict of interest issue and safeguards that have been imposed, and a review of research arrangement with government sponsors and industry sponsors.  Venture capital arrangements will be closely scrutinized for private inurement, private benefit, employment tax, and unrelated trade or business issues. 

 

 

Rev. Proc. 2007-47

This revenue procedure modifies and supersedes Rev. Proc. 97-14 by providing special rules for federally sponsored research. These special rules provide that the rights of the Federal Government and its agencies mandated by the Bayh-Dole Act will not cause research agreements to fail to meet the requirements of section 6.03 of the Revenue Procedure. Under the stated conditions, such rights themselves will not result in private business use by the Federal Government or its agencies of property used in research performed under research agreements. These special rules do not address the use by third parties that actually receive more than non-exclusive, royalty-free licenses as the result of the exercise by a sponsoring Federal agency of its rights under the Bayh-Dole Act, such as its march-in rights. See IRS Releases Guidance on Federally Sponsored Research Agreements.

 

 

 

 

 

 

 

 

 

 

Resources

See Bert Harding's Overview of Tax Consequences of Making Intellectual Property Payments to Employees.

 

updated 7/22/07 to add Rev. Proc. 2007-47
links updated 6/23/08 rab