IRS Provides Insight Into Treatment of Transferable Incentives

In an internal advice on the tax treatment of a pharmaceutical company’s incurred costs in purchasing from a third party a voucher to get expedited review of a new product, the IRS Chief Counsel’s Office provides insight into the treatment of transferable incentives generally.

CCA 202304009 addresses whether a pharmaceutical or biotechnology company (herein a “pharma”) must capitalize costs incurred in a purchase of a priority review voucher (PRV) that was issued to a third party by the U.S. Food & Drug Administration (FDA). As the name indicates, a PRV is a voucher entitling its holder to prioritized FDA review ...