Super Royalty Provision Law and Legal Definition

The US Income Tax Reform Act of 1986 provides that royalties for the transfer by sale, license or otherwise of intangible property to related foreign companies, which have been determined at the time of the transfer on an arm's length basis, may be adjusted in future years by the IRS if they are not commensurate with the income attributable to that intangible. This is called the super royalty provision.