Hiram Is a Computer Engineer And, While Unemployed, Invents a Switching

question 63

Multiple Choice

Hiram is a computer engineer and, while unemployed, invents a switching device for computer networks. He patents the device, but does not reduce it to practice. Hiram has a zero tax basis for the patent. In consideration of $800,000 plus a $1 royalty per device sold, Hiram assigns the patent to a computer manufacturing company. Hiram assigned all substantial rights in the patent. Which of the following is correct?

• A)Hiram automatically has long-term capital gain from the lump sum payment, but not from the royalty payments.
• B)Hiram automatically has long-term capital gain from the royalty payments, but not from the lump sum payment.
• C)Hiram automatically has long-term capital gain from both the lump sum payment and the royalty payments.
• D)Hiram does not have automatic long-term capital gain from either the lump sum payment or the royalty payments.
• E)None of the above.

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Definitions:

Heart Failure

A chronic condition where the heart muscle is unable to pump blood as well as it should, leading to symptoms such as shortness of breath and fluid build-up.

Percussion of Heart

A diagnostic procedure where the chest is tapped lightly to determine the size and borders of the heart by the sounds produced.

Cardiac Borders

The edges of the heart as perceived through examination or imaging techniques, important for assessing heart size and position.

Obese Patients

Individuals with a body mass index (BMI) of 30 or higher, often facing increased health risks and requiring specific medical care.