CSA Questionnaire | QuestionPro

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1. A cost sharing arrangement is an arrangement by which controlled participants share the costs and risks of developing cost shared intangbles in proportion to their RAB shares. An arrangement is a CSA if and only if which of these requirements are met?

2. What is the definition of a platform contribution?

Pre-existing intangibles that has substantial value independent of the services of any individual) made available by a controlled participant under a CSA.

A platform contribution is any resource, capability, or right that a controlled participant has developed, maintained, or acquired externally to the intangible development activity that is reasonably anticipated to contribute to developing cost shared intangibles.

A platform contribution is any resource, capability, or right that a controlled participant has developed, maintained, or acquired externally to the intangible development activity that is not reasonably anticipated to contribute to developing cost shared intangibles.

A platform contribution is any resource, capability, or right that an uncontrolled participant has developed, maintained, or acquired externally to the intangible development activity that is not reasonably anticipated to contribute to developing cost shared intangibles.

3. Which statement below is correct under Reg. section 1.482-7(k)(1) – CSA contractual requirements?

A CSA must be recorded in a written contract within 90 days from the first occurrence of the PCT.

A CSA must be recorded in a written contract within 60 days from the fiscal year end.

A CSA must be recorded in a written contract within 60 days from the first occurrence of an IDC.

A CSA must be recorded in a written contract within 90 days from the tax return filing date.

4. Which statement below is correct under Reg. section 1.482-7(k)(4) – CSA statement?

Only US controlled participant is required to file a CSA statement.

A CSA statement must be filed within 90 days of the first date of a newly formed CSA.

Any changes to the CSA must be reflected in the annual CSA statement by attaching a schedule that documents changes in such information over time.

A CSA statement must disclose the annual IDC amount.

5. Any right to exploit an existing resource, capability, or right without further development of such item, such as the right to make, replicate, license, or sell existing products, does not constitutes a platform contribution to a CSA unless exploitation without further development of such item is reasonably anticipated to contribute to developing or further developing a cost shared intangible.

True

False

6. Provided that stock-based compensation is directly identified with (or reasonably allocable to) Intangible Development Activities ("IDA"), then stock-based compensation would be considered Intangible Development Costs ("IDC").

True

False

7. What amount of the cost attributable to stock-based compensation should be included in the annual Intangible Development Costs ("IDC")?

The amount which is allowable as a deduction for federal income tax purposes.

The amount of stock-based compensation reflected as a charge against income in the audited financial statements prepared under US GAAP.

The amount which is included in the employee’s personal income tax return.

a or b

a or c

b or c

8. Which statement below is correct under Reg. section 1.482-7(e)(1) – Reasonably anticipated benefits ("RAB") share?

Reasonably anticipated benefits must be estimated over the entire period, past and future, of exploitation of the cost shared intangibles, and does not need to reflect any updates.

Reasonably anticipated benefits must be estimated at the beginning of the CSA using the most reliable historical data, and must be consistently used throughout the term of the CSA.

Reasonably anticipated benefits must be estimated over the future period of exploitation of the cost shared intangibles, and should reflect appropriate updates to take into account the most reliable data regarding results available at the time.

Reasonably anticipated benefits must be estimated over the entire period, past and future, of exploitation of the cost shared intangibles, and must reflect appropriate updates to take into account the most reliable data regarding results available at the time.

9. Which of the following are examples of indirect bases for measuring RABs for participants in a CSA under Reg. section 1.482-7(e)(2)?

10. Please complete the following statement from Reg. section 1.482-7(g)(2) – best method analysis applicable for evaluation of a PCT pursuant to a CSA.

Although all of the factors entering into a best method analysis described in §1.482-1(c) and (d) must be considered, specific factors may be particularly relevant in the context of a CSA. In particular, the relative reliability of an application of any method depends on the degree of consistency of the analysis with the applicable contractual terms and allocation of risk under the CSA and this section among the controlled participants as of the date of the PCT, unless a change in such terms or allocation has been made in return for arm's length consideration. In this regard, a CSA involves an ________________________________________________over the reasonably anticipated term of the CSA Activity.

upfront division of the risks as to reasonably anticipated obligations

upfront division of the risks as to reasonably anticipated benefits

upfront division of the functions as to both reasonably anticipated obligations and reasonably anticipated benefits

upfront division of the risks as to both reasonably anticipated obligations and reasonably anticipated benefits

upfront division of the functions as to reasonably anticipated benefits

11. According to Reg. section 1.482-7(g)(2), the reliability of the application of a method depends on the degree of consistency of the analysis with the assumption that uncontrolled taxpayers dealing at arm's length would have evaluated the terms of the transaction, and only entered into such transaction, if no alternative is preferable.

Therefore this condition is not met where,

for any controlled participant the total anticipated income attributable to its entering into the CSA, as of the date of the PCT, is less than the total anticipated income that could be achieved through an alternative arrangement realistically available to that controlled participant

for any controlled participant the total anticipated present value of its costs attributable to its entering into the CSA, as of the date of the PCT, is less than the total anticipated present value of its costs that could be achieved through an alternative arrangement realistically available to that controlled participant.

for any controlled participant the total anticipated present value of its income attributable to its entering into the CSA, as of the date of the PCT, is less than the total anticipated present value of its costs that could be achieved through an alternative arrangement realistically available to that controlled participant

for any controlled participant the total anticipated present value of its income attributable to its entering into the CSA, as of the date of the PCT, is less than the total anticipated present value of its income that could be achieved through an alternative arrangement realistically available to that controlled participant

None of the above.

12. The best method analysis in connection with certain methods or forms of payment may depend on a rate or rates of return used to convert projected results of transactions to present value, or to otherwise convert monetary amounts at one or more points in time to equivalent amounts at a different point or points in time. For this purpose, a discount rate or rates should be used that most reliably reflect the market-correlated risks of activities or transactions and should be applied to the best estimates of the relevant projected results, based on all the information potentially available at the time for which the present value calculation is to be performed.

True

False

13. Realistic alternatives may involve varying risk exposure and, thus, may be more reliably evaluated using different discount rates. In some circumstances, a party may have more risk as a licensee of intangibles needed in its operations, and so require a lower discount rate, than it would have by entering into a CSA to develop such intangibles, which may involve the party's assumption of additional risk in funding its cost contributions to the IDA.

True

False

14. Similarly, self-development of intangibles and licensing out may be riskier for the licensor, and so require a higher discount rate, than entering into a CSA to develop such intangibles, which would relieve the licensor of the obligation to fund a portion of the IDCs of the IDA.

True

False

15. According to Reg. section 1.482-7(g)(4), the income method evaluates whether the amount charged in a PCT is arm's length by reference to a controlled participant's best realistic alternative to entering into a CSA. Under this method, the arm's length charge for a PCT payment will be an amount

such that a controlled participant's present value, as of the date of the PCT, of its cost sharing alternative of entering into a CSA equals the present value of its best realistic alternative.

such that a controlled participant's present value, as of the date of the PCT, of its cost sharing alternative of entering into a CSA is greater than the present value of its best realistic alternative.

such that a controlled participant's present value, as of the date of the PCT, of its cost sharing alternative of entering into a CSA less than the present value of its best realistic alternative.

None of the above

16. The income method may be applied to determine PCT payments in which of the following forms of payment?

Lump sum

Royalty on sales

Royalty on divisions profits

All of the above

17. The acquisition price method applies the comparable uncontrolled transaction method of § 1.482-4(c), or the comparable uncontrolled services price method described in §1.482-9(c), to evaluate whether the amount charged in a PCT, or group of PCTs, is arm's length by reference to the amount charged (the acquisition price) for the stock or asset purchase of an entire organization or portion thereof (the target) in an uncontrolled transaction

True

False

18. Reg. section 1.482-7(i)(6) - periodic adjustments. The Periodic Return Ratio Range ("PRRR") will consist of return ratios that are not less than ___ nor more than ___. Alternatively, if the controlled participants have not substantially complied with the documentation requirements referenced in Treas. Reg. Section 1.482(7)(k), the PRRR will consist of return ratios that are not less than ___ nor more than ___. Note, the answers below are in the sequence of the blanks.

.8, 1.25, .667, 1.25

1.25, 1.5,.667,.8

.667, 1.25,.8, 1.5

.667, 1.5,.8, 1.25

19. All are required under the CSA Administrative requirements except for:

Form of payment due under the PCT

The date on which the CSA is entered into

Functions and risks of each controlled participant involved in the CSA

Translate foreign currencies on a consistent basis

None of the above.

20. Which of the following statements is true?

Each member of the consolidated group shall be treated as one taxpayer

A CSA will not be treated as a partnership under subchapter K of the IRC

A participant that is a foreign corporation or nonresident alien individual will be treated as engaged in a trade or business within the United States solely by reason of its participation in a CSA.

Each cost sharing payment received by a payee will be treated as coming from payments made by payors so designated by the payee.