Below are info on one of the firm's client. Your Senior Manager has asked you to draft an internal memo discussing the implications of the client. Make sure to discuss Issue, Conclusion, Analysis. The manager has also provided you with some sources to start your research for the client.

Wilma, a famous lacrosse player, is considering the possibility of transferring the sole right to use her name to promote lacrosse shoes produced and sold by the LAX Corporation. LAX will pay $2 million to obtain the right to use Wilma's name for the next 40 years. LAX may use the name on the shoes and as a part of any of the company's advertisements for lacrosse shows. If Wilma signs the contract and receives the $2 million payment, will she have to recognize capital gain or ordinary income?

A partial list of sources is:

1221

Rev, Rul. 65-261, 1965-2 C.B. 281