Question

Willa, a U.S. corporation, owns the rights to a patent related to a medical device. Willa...

Willa, a U.S. corporation, owns the rights to a patent related to a medical device. Willa licenses the rights to use the patent to IrishCo, which uses the patent in its manufacturing facility located in Ireland. What is the source of the $1 million royalty received by Willa from IrishCo for the use of the patent?

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Answer #1

The source of income is generally dependant on the type of income that is sourced in the country (U.S.A). In case of royalty payments (for use of an intangible asset) received a by a U.S. corporation, the source of income will be the country in which the property is used.

In the given case, Willa corporation has received royalty payment of $1 million against the use of patents (which is an intangible asset) from IrishCo. Therefore, the source of income will be Ireland (the country in which the patent is used).

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