[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1249-1]

[Page 410]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1249-1  Gain from certain sales or exchanges of patents, etc., 
to foreign corporations.

    (a) General rule. Section 1249 provides that if gain is recognized 
from the sale or exchange after December 31, 1962, of a patent, an 
invention, model, or design (whether or not patented), a copyright, a 
secret formula or process, or any other similar property right (not 
including property such as goodwill, a trademark, or a trade brand) to 
any foreign corporation by any United States person (as defined in 
section 7701(a)(30)) which controls such foreign corporation, and if 
such gain would (but for the provisions of section 1249) be gain from 
the sale or exchange of a capital asset or of property described in 
section 1231, then such gain shall be considered as gain from the sale 
or exchange of property which is neither a capital asset nor property 
described in section 1231. Section 1249 applies only to gain recognized 
in taxable years beginning after December 31, 1962.
    (b) Control. For purposes of paragraph (a) of this section, the term 
control means, with respect to any foreign corporation, the ownership, 
directly or indirectly, of stock possessing more than 50 percent of the 
total combined voting power of all classes of stock entitled to vote. 
For purposes of the preceding sentence, the rules for determining 
ownership of stock provided by section 958 (a) and (b), and the 
principles for determining percentage of total combined voting power 
owned by United States shareholders provided by paragraphs (b) and (c) 
of Sec. 1.957-1, shall apply.

[T.D. 6765, 29 FR 14879, Nov. 3, 1964]