IRS rules that certain milestone payments are not success-based fees

Washington National Tax Services

In CCA 201234027, the IRS addressed the treatment of milestone payments for purposes of applying the 70/30 safe harbor rule for success-based fees set forth in Rev. Proc. 2011-29. The IRS concluded that nonrefundable milestone payments made to a service provider in connection with a covered transaction described in Reg. sec. 1.263(a)-5(e)(3) are not success-based fees;  thus, the 70/30 safe harbor is not applicable.



Return to Tax research and insights
Washington National Tax Services newsletter archive