Treas. Reg. 1.861-18(d)-(e): services to develop digital content, and know-how (26 CFR 1.861-18(d), (e))
Work to create new content for a buyer is a service when the facts show the buyer is to own the copyright and carries the risk. The regulation's own know-how rule is narrow and covers only information about developing digital content.
Dated 18 Oct 2026Source checked 18 Oct 2026Basis: primary text
In the source's own words
“The determination of whether a transaction involving newly developed or modified digital content involves the provision of services described in paragraph (b)(1) of this section is based on all the facts and circumstances of the transaction, including, as appropriate, the intent of the parties (as evidenced by their agreement and conduct) as to which party is to own the copyright rights in the digital content and how the risks of loss are allocated between the parties. ... The provision of information with respect to digital content involves the provision of know-how for purposes of this section only if the information is- (1) Information relating to the development of digital content;”
Where it was read
Also read from the same source
- Treas. Reg. 1.861-18(a)-(b): what a digital content transaction is and its four categories (26 CFR 1.861-18(a)(2), (b)(1))
- Treas. Reg. 1.861-18(c): copyright rights and copyrighted articles (26 CFR 1.861-18(c)(2), (c)(3))
- Treas. Reg. 1.861-18(f)(1): a transfer of a copyright right is a sale or a licence, and a licence is sourced as a royalty (26 CFR 1.861-18(f)(1))
- Treas. Reg. 1.861-18(f)(2)-(3): a copy that is not truly sold is a lease, and a delete-after-a-period rule is a lease (26 CFR 1.861-18(f)(2), (f)(3))
- Treas. Reg. 1.861-18(f)(2)(ii): sourcing of a sold copy, and the billing-address rule for electronic delivery (26 CFR 1.861-18(f)(2)(ii))
- Treas. Reg. 1.861-18(g)(1) and (i): the label on the contract does not decide, and the rule's start date (26 CFR 1.861-18(g)(1), (i)(1))
Figures it counts in
It is shown on its own, not counted into a figure.
Cited in this guide