Under the IP assignment agreement the payment timeframe is 5 years. As far as I understand, the bespoke software will be entirely depreciated within 3 years. So, a C-Corp will pay the full price of the IP for the software after it will be fuly depreciated. Do I get it right that a C-Corp will not have to pay any taxes, as it BUYS the software?
Will a C-Corp (cash accounting method) have to pay any tax if it buys IP for a tailored (not off-the-shelf) software, depreciates it and PAYS for it after full depreciation?
Answers
I am not sure whether I do understand all the details related to your question. As a general guideline, whenever an object changes hands or a service is rendered, the IRS assumes that "an exchange of an economic value" has taken place. And if the price paid results in the exchange of the legal title of the goods, that price will be considered "the economic value" of the transaction.
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