Well, of COURSE I didn't resell the license - that would be silly! I sold a license, but I had to pay a royalty to my wholly-owned Irish subsidiary for selling the license. It's complete coincidence that the royalty rate is 99% of the gross sales on the licenses. Thus, you can only tax me on the 1% profit that I made on that license, and that's BEFORE I deduct anything else (I'm sure I can find 1% to expense somewhere else - furniture depreciation sounds like a good idea!).
It's kinda like capital gains tax. If I sell $100 worth of MS stock, I'm not taxed on $100. Rather, I'm taxed on the difference between what I paid for it and what I got for it. If I paid $90 for that stock, I only owe taxes on $10 of capital gains income. Things get really tricky when selling for a loss, but I don't want to complicate the matter.
I know it's an oversimplification, but that's essentially the tricks that they're using. When you remove all of the accounting mumbo jumbo, it reveals the tricks for what they are: dirty, slimy ways to avoid paying taxes. (That being said, all the tricks are legal, and if I could use the tricks, I would use them to the fullest extent allowed by law as well).