Bausch & Lomb, Inc. v. Commissioner

Casebooks

International Taxation

• Avi-Yonah, 6th Ed.
• Peroni, 5th Ed.

Key Terms

• TrademarkA symbolic representation of a company or product.
• PatentA monopoly for inventors of processes, machines, and compositions over their inventions.
• Abuse of DiscretionAn adjudicator’s failure to make a decision in accordance with principles of soundness, reasonableness, or legality.
• Gross IncomeFinancial gain from any source.
• SubsidiaryA corporate entity owned or controlled by some separate, higher corporate entity.
• Intangible PropertyProperty with no physical existence, such as an account number.
• LicensePermission to do something that would otherwise be prohibited.
• Arbitrary and CapriciousDescribes a decision made according to whim and without regard to facts or law; the principal standard of review courts use when reviewing challenges to agency decisions.
• RoyaltyOwnership of a portion of the proceeds from the sale of intellectual property rights or from the sale of tangible materials or products, such as oil and gas.
• AllocationThe amount or share set aside or designated for a particular purpose. For example, in taxation, one can allocate portions of income to different purposes.
• Controlled Foreign CorporationA corporate entity organized outside of the United States that is more than 50 percent owned by United States shareholders.
• Power to Reallocate Income (Internal Revenue Code)Codified at § 482, gives United States tax authorities power to reallocate gross income across organizations controlled by the same interests to prevent tax evasion or better reflect the organizations’ incomes.
• Tax EvasionIntentionally failing to pay taxes or underpaying taxes.
• Arm’s-Length Standard (Internal Revenue Code)An Internal Revenue Service requirement that transactions between commonly owned or controlled entities, for the purposes of correctly reflecting a taxpayer’s income and preventing tax evasion, are to be compared to transactions between unrelated, or uncontrolled, entities under similar circumstances.
• Controlled TransactionA transfer of assets, such as the sale of goods or services, between two or more enterprises commonly owned or controlled by the same interests. Income derived from a controlled transaction may be reallocated by the Internal Revenue Service to clearly reflect a taxpayer’s income within the controlled group and prevent tax avoidance.
• LicensorOne who gives another, called the licensee, permission to do or use something, such as intellectual property, that would otherwise be prohibited.