Patents and Taxes, Part II Patents and Taxes, Part II Patents are depreciable assets.
Assignments have capital gains consequences.
Individuals and corporations alike need to know the tax consequences of patents and patent licensing, but these are matters generally left to tax attorneys. Unfortunately, by the time a patent matter comes to the tax attorney's attention, it is often too late to take advantage of certain deductions because the documentation required to prove eligibility for available tax deductions and to survive audit was not properly acquired beforehand. A patent attorney cannot be expected to play tax expert, but it must also be remembered that tax counsel cannot be expected to pass the patent bar. The patent attorney should have the minimal knowledge set forth in these articles so as to effectively aid the company's or client's tax counsel when tax time rolls around. A long or short term capital gain or loss occurs if the patent is sold or exchanged within the time periods set forth in IRC Section 1222 and as computed in Section 1223 .