Tom Williams is an equal partner in a partnership with the Kansas Corporation. Williams, an inventor, produced a new process while working for the partnership, which has been patented by the partnership. Before making any use of the patent, the partnership entered into a contract granting all rights to use the process for the life of the patent to the Mason Manufacturing Co.
The time between receiving the patent and entering into the contract with Mason amounted to eight months. Mason agreed to pay 0.3% of all sales revenue generated by products produced as a result of the process. If Mason fails to make payments on a timely basis, Mason’s right to use the process is forfeited and the agreement between the partnership and Mason is canceled. Will any of the proceeds collected qualify as LTCG under Sec. 1235?
A partial list of research sources is

• Reg. Sec. 1.1235-2
• George N. Soffron, 35 T.C. 787 (1961)