Jane invents a new widget that she patents. She then reaches a royalty agreement whereby she will still have ownership rights in the patent, but XYZ company will manufacture the widgets and she will be entitled to a 5 cent royalty for every widget used in their products. Thereafter, she immediately assigns the ownership right in the patent and any resulting royalties to Joann. How will the royalties be taxed when they are paid? Would your answer change if Jane waited to transfer the patent to Joann until September after $5000 of royalties have been earned under the agreement, but had not yet been paid to Jane?