MANAGING RISKS is a part of doing business. Companies utilizing the IP HOLDING subsidiary structure need to KNOW HOW to manage two main risks: 1. losing TRADEMARK PROTECTION, 2. being challenged by TAX AUTHORITIES. Trademark law requires that the trademark owner exercise control of the quality of the goods or services for which the trademark is licensed, otherwise the mark may be deemed abandoned. The trademark owner should evidence performance of the control requirement to address this compliance risk. From a TAX RISK perspective, the IP holding company should not be incorporated solely for the transferring company to avail itself of the tax benefit of reducing its tax base. The company must be able to justify substantial business reasons distinct from the tax benefits as well as operational activities of the IP holding company.