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Tainted royalty income includes income derived from assigning any copyright, patent, trademark or other like property or right.
Specifically excluded from tainted royalty income are royalties received from unrelated persons in the course of carrying on a business where the CFC substantially develops or improves the property or right for which the royalty is paid. For example, if a CFC develops software and licenses it to an unrelated party, the royalty income is not tainted.
Last modified: 05 Dec 2006QC 18000