The ABA Tax Section has submitted comments to the IRS on Proposed Regulations For Cost Sharing Arrangements (12/4/06) .  Here is the Executive Summary:

These comments address proposed amendments to Reg. § 1.482-7 governing cost sharing arrangements (“CSAs”). … The Proposed Regs would revise the existing Treasury Regulations under § 482 that govern qualified cost sharing arrangements ("QCSAs"). The Regs permit taxpayers to be treated as owning, for federal income tax purposes, rights to developed intangibles in return for sharing in the cost of developing those intangibles and paying the value of pre-existing intangible property that is made available to the development process in proportion to their shares of the reasonably anticipated benefits to be derived from the developed intangibles. The preamble to the Proposed Regs expresses concerns that taxpayers may have undervalued the intangibles and other resources that are made available to cost sharing arrangements and therefore that the parties contributing such intangibles and resources have been undercompensated for their contributions. We believe the Proposed Regs provide a framework that would largely ensure that external contributions are adequately compensated for and that, on an ex ante basis are structured on arm’s length economic terms. We therefore commend Treasury and the IRS for the thoughtful and rigorous effort that went into developing the Proposed Regs. We nevertheless believe certain modifications are worthy of consideration.