Tax law on sale of patent and after sale of patent.

[PacificIslander]

What is the name of your state (only U.S. law)? California

Hello,

I have just been granted a patent and have patent now in hand. My plan is to sell the patent to one of the major corperations and the amount is expected to be in the larger figures.

In my research so far, I have found certain information I need to clarify, since some of it is a little confusing.

It is my understanding from what I have read online, that I can sell the patent out-right for one lump sum and only have to pay the capital gains tax on such sale (which is still 15%?) for the year in which it is sold (which will probably be 2014, but possibly 2013).

It was listed that the sale of the patent would need to be a full sale and I transfer "all" rights to the patent to the buyer. But one question regarding this, can I sell "all" rights of the patent to the buyer, then be a lisencee from the buyer to use the patent design myself (with the full agreement from the buyer) for say $1 per year licensing fee?

Also, after the sale of the patent and after the proper capital tax is paid to the IRS in full, can I then have the IRS "sign off" on the tax on this money, specifically a letter stating that all proper tax has been paid on this money from the sale and that this money is now under no obligation for more tax?

The plan is to sell the patent, pay the proper and legal tax, then the money would be divided in banks outside the US and placed into saftey deposit boxes, under no accounts and not generating any interest, dividends, or other monies in any manner. I would simply use the money in which the tax was already paid at my leasure from these saftey deposit boxes outside the US. By the money not generating any type of income in any manner, and the proper tax has been already paid and confirmed by the IRS in writing, the IRS would have no legal or proper grounds to touch my money ever again ... would this be correct?

Thanks in advance.

 

[ecmst12]

Your wisest course of action would be to consult a financial planner to determine the best way to get the most out of your money.

 

[PacificIslander]

Your wisest course of action would be to consult a financial planner to determine the best way to get the most out of your money.

Thank you for the reply.

My case is different, simply because I'm not looking for "tax stategies" or "how to invest" this money. I simply want to keep things both extremely simple and extremely legal.

After the sale of the patent, it will be more money than I will ever use in my life. I am extremely versed in living within a budget, since I have done that all my life. So other "financial" advise would not be needed in my case (although again, I do thank you for your reply).

It would come down to these questions...

#1 Is the sale of a patent still considered "capital gains" and is that rate still 15%?
#2 Is the capital gains tax the only tax I will have to pay?
#3 Once proper tax is paid in full to the IRS and they have "signed off" on this money, can they ever make claim on this money again, as long as it is not generating other income in any manner (interest, dividends, etc.), because the money will never come back to the US.

Thanks again.

 

[LdiJ]

Thank you for the reply.

My case is different, simply because I'm not looking for "tax stategies" or "how to invest" this money. I simply want to keep things both extremely simple and extremely legal.

After the sale of the patent, it will be more money than I will ever use in my life. I am extremely versed in living within a budget, since I have done that all my life. So other "financial" advise would not be needed in my case (although again, I do thank you for your reply).

It would come down to these questions...

#1 Is the sale of a patent still considered "capital gains" and is that rate still 15%?
#2 Is the capital gains tax the only tax I will have to pay?
#3 Once proper tax is paid in full to the IRS and they have "signed off" on this money, can they ever make claim on this money again, as long as it is not generating other income in any manner (interest, dividends, etc.), because the money will never come back to the US.

Thanks again.

You really need to see a tax professional. You will not pay tax on the full amount of the sale, as you will have had expenses in developing the invention that you patented.

You don't need the IRS to "sign off" on the money. Once you have paid tax on the income, you can safely put it in an interest bearing account and the only tax you would have to pay after that point would be on the interest earned on the money. There is no reason to put it offshore or to put it in safe deposit boxes.

 

[PacificIslander]

You really need to see a tax professional. You will not pay tax on the full amount of the sale, as you will have had expenses in developing the invention that you patented.

You don't need the IRS to "sign off" on the money. Once you have paid tax on the income, you can safely put it in an interest bearing account and the only tax you would have to pay after that point would be on the interest earned on the money. There is no reason to put it offshore or to put it in safe deposit boxes.

Thank you for the reply.

From what I have read, if I do a "lump sum" full sale of the patent, then it would be taxed on the full sale amount for the year it was sold. The only time it would not be fully taxed, is if it were sold and I was paid in "payments" and only those payments would be taxed for the amount paid in that year.

I am not going to itemize expenses up through the process of developing and getting the patent, because those are minimal and the biggest portion of all this has been my time, which I will consider the sale of the patent to cover my time. This way it will be one simple transaction, with very few things to calculate.

Again, the only real questions would be as I listed above.

I am an American, and I want to do everything within the law, ensuring there is no future obligations in which I can be 'restrained" in any manner by the US government or even a financial institution. I want to cut all ties with the US government and its agencies once this transaction is complete. And by not having any bank accounts anywhere and only using saftey deposit boxes, it is then impossible for those monies to be frozen or attached in any manner. Any actual bank account in any country can be frozen or attached. Or even if there is econimic problems with a bank in general, accounts can be frozen and you would not have access to your monies. That is where the safety deposit boxes come into play. Even in recent past, if a bank has failed, the 'accounts' are locked down until they have time to sort out the situation. However, any person still had full access to their saftey deposit boxes without any restriction. By having your cash in a saftey deposit box, you still have full access to it, even if the bank itself fails.

This may sound like a paranoid view of both the US government and the financial system, but it has shown to be an actual very realitic situation in the economic situations in both the US and abroad these days.

So I am looking to keep things both simple and legal.

Sell my patent
Pay the proper tax(es)
Get the hell out of the "rat race", including out of the US
And be confident I have the resources to live a quiet peaceful life for the rest of my life.

Thanks again for the reply.

 

[tranquility]

I had a class just on such matters. See a guy. Anything else requires an article.

 

[PacificIslander]

I had a class just on such matters. See a guy. Anything else requires an article.

Thanks for the reply. I was under the impression that this forum had "experts". So why would a few simple questions require an "article"?

#1 Is the sale of a patent still considered "capital gains" and is that rate still 15%? Yes? No? What is the current capital gains tax, if it is not 15%?


#2 Is the capital gains tax the only tax I will have to pay? Yes? No?


#3 Once proper tax is paid in full to the IRS and no monies are ever generated from these monies (like interest, dividends, etc.) the IRS can never touch this money again? Yes? No?


I'm not trying to be rude, but I don't see much complexity to the questions.

Thanks again.

 

[ecmst12]

That's why you need to see a professional - because you don't understand the complexity.

 

[PacificIslander]

That's why you need to see a professional - because you don't understand the complexity.

And that is why I am here. I thought there were "professionals" here.

And how are these questions complex? They are very simple and straight-forward.

Is the full and out-right sale of a patent still considered a capital gain and is reported as such?

If so, is the capital gains tax still 15%?

Once the proper tax is paid, as long as the monies generate no revenue, the IRS can nver touch them again?

Sorry, but I do not understand why these questions would be considered complex, because there are no "ands, ifs or buts" to the questions. It's like asking "what is 2+2?" Its a simple question, with a simple answer.

This is a forum that claims to be for people to ask questions and get "expert" type advice. Yet, all I have seen so far (no offense intended, just pointing out the obvious) is people saying I need to go see a "tax expert" .. and I thought this was the proper place to get "expert tax" advice.

Thanks again.

 

[TheGeekess]

The forum prefers that you not necropost.

 

[tranquility]

I do taxes. I've done them for decades. Although I specialize in income and real property, because my best friend is a patent attorney, I keep up with the taxation of intellectual property. That keeping up included an eight hour class just on the issues you are asking about.

If you see a tax professional, you will need to provide lots more facts and spend some hundreds for his time in consideration.

Complex financial issues are complex financial issues. Get over it. There are many articles out there to give you what you seem to want.

To get an answer, see a guy.

 

[ecmst12]

In other words, just because you think it was a simple question does not mean it actually IS a simple question.

 

[PacificIslander]

In other words, just because you think it was a simple question does not mean it actually IS a simple question.

In other words, you can say that a question "what is 2 + 2?" is a complex question? You may be thinking of lots of possible variables, but miss the simple question right in front of you? Not at all trying to be rude, but it seems like this is what is being mistaken here with my "simple" questions.

How hard can it be to clarify .. "how much is the current capital gains tax now for the year 2013?" ?? This is something any tax person should be able to clarify. It's their "job" and they should be answer the "basics". If not, they should consider another field of work.

My questions are both clear and simple, giving background and intent. So many things may not be as complex as you are trying to make them to be. Sometimes a simple question is just that..simple. No over analyzing and trying to think of different scenerios outside the specific question.

Thanks.

 

[quincy]

In other words, you can say that a question "what is 2 + 2?" is a complex question? You may be thinking of lots of possible variables, but miss the simple question right in front of you? Not at all trying to be rude, but it seems like this is what is being mistaken here with my "simple" questions.

How hard can it be to clarify .. "how much is the current capital gains tax now for the year 2013?" ?? This is something any tax person should be able to clarify. It's their "job" and they should be answer the "basics". If not, they should consider another field of work.

My questions are both clear and simple, giving background and intent. So many things may not be as complex as you are trying to make them to be. Sometimes a simple question is just that..simple. No over analyzing and trying to think of different scenerios outside the specific question.

Thanks.

Why, if your questions are both so clear and simple, can't you answer them yourself?

Two things you can probably expect: One, no more free advice on this forum and, two, paying a tax professional extra to put up with your attitude.



(as a note: information you posted on patents and copyrights, in all of the old, dead threads you revived, was incorrect)

 

[PacificIslander]

Why, if your questions are both so clear and simple, can't you answer them yourself?

Two things you can probably expect: One, no more free advice on this forum and, two, paying a tax professional extra to put up with your attitude.



(as a note: information you posted on patents and copyrights, in all of the old, dead threads you revived, was incorrect)

Well first, who has given any advice that is worth anything here?? No one! Even a self proclaimed "tax person" can't even answer the simple question of what is the current capital gains tax rate! Now how pathetic is that? A person in the tax field, a basic tax 101 question, yet can't even answer.

No, I will simply call the IRS on Monday and ask them directly. At least I will get legitimate answers, unlike here on this forum.

And what "attitude"? I ask simple straight-forward questions and get "idiot" advise from people who obviously don't know anthing about the subject matter and the "advise" is to go talk to someone who is a professional. It just shows there are no "professionals" here.

On my comments in copyright and patents, it was my mistake, because I am new here and did not look at the dates before replying. I thought they were newer questions...and nothing about those are incorrect. that happens to be an area i do have experience in, with 4 US design patents, 2 US Utility patents, 2 international design patents and 6 more US patents and 3 international patents pending, ranging from 1990 to present. And I did all that work myself! How many patents to do you own?