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.

---

Definitions:

Social Loafing

The phenomenon where individuals exert less effort when working in groups than when working alone.

Bystander Effect

The concept within social psychology where an individual's likelihood to help someone in need diminishes when they are in the company of others.

Social Interference

The impact that the presence or actions of others have on an individual's behavior, which can hinder or facilitate performance.

Individualist

A person who prioritizes independence and self-reliance, often valuing personal goals and self-expression over collective goals.