Larry Was the Holder of a Patent on a Video

question 20

Essay

Larry was the holder of a patent on a video game.During 2019, he sold all substantial rights in the patent for $365,000 in cash and a 3% royalty on the purchaser's first $10,200,000 of sales each year related to the product in which the patent is incorporated.Larry had not reduced the patent to practice.He had a $86,000 basis for the patent.During
2019, he received $30,000 in royalties.What is the nature and amount of Larry's gain?

---

Definitions:

Synaptic Vesicles

Membrane-bound structures within neurons that store neurotransmitters for release at the synapse during neural communication.

Axon Terminals

The distal terminations of the branches of an axon, responsible for releasing neurotransmitters into the synaptic cleft to communicate with neighboring neurons.

Receptor Sites

Specific locations on the surface of a cell or within a cell where hormones, neurotransmitters, or drugs can bind and elicit a specific physiological response.

Neurons

Nerve cells that are the basic building blocks of the nervous system, responsible for receiving, processing, and transmitting information through electrical and chemical signals.