A detailed look at the tax valuation of intellectual property

This article focuses on valuation of a taxpayer corporation's intellectual property for purposes of ad valorem property taxation. Basically, the reasons for such a valuation are twofold: (1) when the intellectual property is subject to taxation and the taxpayer has to file, defend, or appeal the property valuation; and (2) when the intellectual property is exempt from taxation but its value is included in the taxing authority's assessment of the taxpayer's overall property value. The second situation occurs most frequently when the taxing authority uses the so-called “unit valuation” principle (or “overall business enterprise valuation” principle) to value taxpayer property. (R.F. Reilly, 21 Journal of Multistate Taxation and Incentives, No. 1, 6 (March/April 2011).)