Revenue Ruling 2008-31

Revenue Ruling 2008-31 clarifies how certain tax rules apply to payments made for the use of a taxpayer’s intellectual property, like patents or copyrights. Specifically, it states that payments made by a U.S. entity to a foreign entity for the use of these rights can be considered royalties. This classification affects how these payments are taxed under U.S. law, particularly concerning withholding taxes. This ruling helps ensure that taxpayers understand their obligations and how to accurately report such income and expenses related to intellectual property.