At the heart of the case is a transaction that makes no economic sense other than as a tax dodge.

In May of 1997, Altera entered into a cost-sharing agreement with one of its subsidiaries, Altera International,Inc., a Cayman Islands corporation (“Altera International”), which had been incorporated earlier that year. Altera granted to Altera International a license to use and exploit Altera’s preexisting intangible property everywhere in the world except the United States and Canada. In exchange, Altera International paid royalties to Altera. The parties agreed to pool their resources to share R&D costs in proportion to the benefits anticipated from new technologies.

However, the earliest settlers arrived in the islands around 1658 as deserters from the British Army in Jamaica. The first colonists were named Bodden and Watler – with fishermen, slaves, sailors and refugees from the Spanish Inquisition soon to follow.

The deduction is meant to induce companies with large U.S. operations and significant foreign income from patent royalties to base more of those assets in the U.S. Such companies, especially in technology and pharmaceutical sectors, often hold foreign rights for their IP in a company based in a low-tax country.

I have been a CPA for over 30 years focusing on taxation. I have extensive experience with partnerships, real estate and high net worth individuals. My ideology can be summarized at least metaphorically by this quote: "I have a total irreverence for anything connect...