A Taxpayer Sells a Patent on a New Algorithm for a Gain.Which

question 3

Multiple Choice

A taxpayer sells a patent on a new algorithm for a gain.Which taxpayer will be allowed capital gain treatment for the sale? Assume that the patent had not been placed in service as of the acquisition date.

• A)a sole proprietor who purchased the patent from the inventor
• B)a corporation who purchased the patent from the inventor
• C)both of the above
• D)none of the above

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Definitions:

Inductive Reactance

The opposition to alternating current flow due to the inductance of a component or circuit, measured in ohms.

Reactive Power

Also called wattless power. Calculated by multiplying reactive voltage by reactive current. Can be produced by inductive or capacitive loads.

Inductive Reactance

The opposition an inductor provides to alternating current, directly proportional to the frequency of the current.

Pure Inductive

Refers to a circuit element or circuit that purely has inductance without any resistance, ideally opposing changes in current by generating a magnetic field.