IRS directive on milestone payments leaves some issues unresolved

May 2013

Overview

The IRS Large Business and International Division (LB&I) recently issued a memorandum directing LB&I staff to not challenge the treatment of certain ‘eligible milestone payments’ paid in the course of a covered transaction in which the taxpayer also incurs a success-based fee and certain other requirements are met (the directive).  However, the directive may not provide the simplification and certainty that taxpayers desire.

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