Question
Hiram is a computer engineer and, while unemployed, invents a switching device for computer networks. He patents the device, but does not reduce it to
-
Hiram is a computer engineer and, while unemployed, invents a switching device for computer networks. He patents the device, but does not reduce it to practice. Hiram has a zero tax basis for the patent. In consideration of $800,000 plus a $1 royalty per device sold, Hiram assigns the patent to a computer manufacturing company. Hiram assigned all substantial rights in the patent. Which of the following is correct?
Hiram automatically has long-term capital gain from the lump sum payment, but not from the royalty payments.
Hiram automatically has long-term capital gain from the royalty payments, but not from the lump sum payment.
Hiram automatically has long-term capital gain from both the lump sum payment and the royalty payments.
Hiram does not have automatic long-term capital gain from either the lump sum payment or the royalty payments.
-
$20,000.
The investor has a short-term capital loss of $20,000.
The investor has a nondeductible loss of $20,000.
The investor has a short-term capital gain of $20,000.
Hiram is a computer engineer and, while unemployed, invents a switching device for computer networks. He patents the device, but does not reduce it to practice. Hiram has a zero tax basis for the patent. In consideration of $800,000 plus a $1 royalty per device sold, Hiram assigns the patent to a computer manufacturing company. Hiram assigned all substantial rights in the patent. Which of the following is correct?
| Hiram automatically has long-term capital gain from the lump sum payment, but not from the royalty payments. | ||
| Hiram automatically has long-term capital gain from the royalty payments, but not from the lump sum payment. | ||
| Hiram automatically has long-term capital gain from both the lump sum payment and the royalty payments. | ||
| Hiram does not have automatic long-term capital gain from either the lump sum payment or the royalty payments. |
| $20,000. | ||
| The investor has a short-term capital loss of $20,000. | ||
| The investor has a nondeductible loss of $20,000. | ||
| The investor has a short-term capital gain of $20,000. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Auditing Advances In Behavioral Research
Authors: Lawrence A. Ponemon, David R.L. Gabhart
1st Edition
0387976191, 978-0387976198
