Mr. Hiram is a computer engineer and, while unemployed, invents a switching device for computer...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Mr. 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. He assigns all substantial rights in the patent. Which of the following is correct?
a. Hiram automatically has long-term capital gain from the lump-sum payment, but not from the royalty payments.
b. Hiram automatically has long-term capital gain from the royalty payments but not from the lump-sum payment.
c. Hiram automatically has long-term capital gain from both the lump-sum payment and the royalty payments.
d. Hiram does not have automatic long-term capital gain from either the lump-sum payment or the royalty payments.
e. None of these.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
