26 U.S.C. § 1235
§ 1235. Sale or exchange of patents
No plain-English explainer yet. Below is the official text. Explainers are being added section by section.
History
Part of the code since 1954. Last changed December 19, 2014 by the Tax Increase Prevention Act of 2014.
Every change, newest first (6)
- December 19, 2014Tax Increase Prevention Act of 2014
- July 22, 1998IRS Restructuring and Reform Act of 1998
- July 18, 1984Deficit Reduction Act of 1984
- October 4, 1976Tax Reform Act of 1976
- September 2, 1958Public Law 85-866
- August 16, 1954Internal Revenue Code of 1954 (original text)
The law as written
Current through Public Law 119-102. Amendment notes omitted.
A transfer (other than by gift, inheritance, or devise) of property consisting of all substantial rights to a patent, or an undivided interest therein which includes a part of all such rights, by any holder shall be considered the sale or exchange of a capital asset held for more than 1 year, regardless of whether or not payments in consideration of such transfer are—
payable periodically over a period generally coterminous with the transferee’s use of the patent, or
contingent on the productivity, use, or disposition of the property transferred.
For purposes of this section, the term “holder” means—
any individual whose efforts created such property, or
any other individual who has acquired his interest in such property in exchange for consideration in money or money’s worth paid to such creator prior to actual reduction to practice of the invention covered by the patent, if such individual is neither—
the employer of such creator, nor
related to such creator (within the meaning of subsection (c)).
Subsection (a) shall not apply to any transfer, directly or indirectly, between persons specified within any one of the paragraphs of section 267(b) or persons described in section 707(b); except that, in applying section 267(b) and (c) and section 707(b) for purposes of this section—
the phrase “25 percent or more” shall be substituted for the phrase “more than 50 percent” each place it appears in section 267(b) or 707(b), and
paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants.
For special rule relating to nonresident aliens, see section 871(a).