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))
The IRS sorts a transfer of digital content (text, code, audio, video) into one of four boxes: a transfer of a copyright right, a transfer of a copy, services to develop the content, or know-how. A database counts as a computer program only when it is incidental to a program, and I found nothing in the regulation that names a data licence.
Dated 18 Oct 2026Source checked 18 Oct 2026Basis: primary text
In the source's own words
“For purposes of this section, digital content means a computer program or any other content, such as books, movies, and music, in digital format that is- (A) Protected by copyright law; or ... a computer program is a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result and includes any media, user manuals, documentation, data base, or similar item if the media, user manuals, documentation, data base, or other similar item is incidental to the operation of the computer program. ... (iv) The provision of know-how relating to development of digital content.”
Where it was read
Also read from the same source
- 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(d)-(e): services to develop digital content, and know-how (26 CFR 1.861-18(d), (e))
- 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