Larry Was the Holder of a Patent on a Video

question 43

Essay

Larry was the holder of a patent on a video game. During 2018, 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 2018, he received $30,000 in royalties. What is the nature and amount of Larry's gain?

---

Definitions:

Ataxic

Referring to ataxia, a neurological sign characterized by impaired balance or coordination, often due to damage to the brain, nerves, or muscles.

Blood Alcohol Level

The concentration of alcohol in an individual's bloodstream, typically measured to assess intoxication for legal or medical purposes.

Disulfiram

A medication used to support the treatment of chronic alcoholism by producing an acute sensitivity to ethanol (drinking alcohol).

Intoxicated

The state of being under the influence of alcohol or drugs, impairing cognitive and physical functions.