IP trans to holding company

IP trans to holding company

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Trading company is successful and utilises software which it has developed over a number of years. The development costs have been expensed and the software has not appeared as an asset on the balance sheet.

Client wishes to form a holding company to protect the IP of the software, ie the holding company needs to own the software.

Presumably the holding company has to "buy" the rights to the software from the trading company? The basic question is does the transaction create taxable income in the trading company?

Also what transactions would be recorded in the trading company for the transfer?

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