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

question 76

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 ????????.
• E) None of the above.

---

Definitions:

Groupthink

Groupthink is a psychological phenomenon that occurs within a group of people when the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Team Satisfaction

The level of contentment members feel towards their team, often influenced by the team's success, relationships, and perceived value.

Cross-Training

A training method involving multiple types of exercises or the development of diverse skills to enhance overall performance and flexibility.

Teammate Roles

The specific functions or parts played by members within a team to achieve the group's objectives.