Intellectual Property Law Questions Answered

View Original

How can patent damages be taxed as capital gains?

Tax experts have seen a new trend where patent damages are being treated as capital gains.  This can happen because:

  • section 1235 allows qualification for capital gains when the money award is tied to a transfer of all rights to the patent (sale); and

  • the law has historically made exceptions for patents.

Read about how settlements and awards for patent damages can be treated as capital gains rather than ordinary income.