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Hagit is a computer engineer and, while unemployed, invents a switching device for computer networks. She patents the device but does not reduce it to
Hagit is a computer engineer and, while unemployed, invents a switching device for computer networks. She patents the device but does not reduce it to practice. Hagit has a zero tax basis for the patent. In consideration of $1,600,000 plus a $1 royalty per device sold, Hagit assigns the patent to a computer manufacturing company. She assigns all substantial rights in the patent. Which of the following is correct? a. Hagit automatically has long-term capital gain from the lump-sum payment, but not from the royalty payment. b. Hagit does not have auotmatic long-term capital gain from either the lump sum payment or the royalty payment. c. Hagit automatically has long-term capital gain from both the lump=sum payment and the royalty payment. d. Hagit automatically has long-term captial gain from the royalty payments but not from the lump-sum payment
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