26-U.S.C.-1235
§1235 – Sale Or Exchange of Patents
Pathway
Title 26 > Subtitle A > Chapter 1 > Subchapter P > Part IV > Section 1235
Details
- Reference: Section 1235
- Legend: §1235 – Sale Or Exchange of Patents
- USCode Year: 2013
Provision Content
(a) General
A transfer (other than by gift, inheritance, or devise) of property consisting of all substantial rights to a patent, or an undivided interest therein which includes a part of all such rights, by any holder shall be considered the sale or exchange of a capital asset held for more than 1 year, regardless of whether or not payments in consideration of such transfer are—
(1) payable periodically over a period generally coterminous with the transferees use of the patent, or
(2) contingent on the productivity, use, or disposition of the property transferred.
(b) Holder defined
For purposes of this section, the term holder means—
(1) any individual whose efforts created such property, or
(2) any other individual who has acquired his interest in such property in exchange for consideration in money or moneys worth paid to such creator prior to actual reduction to practice of the invention covered by the patent, if such individual is neither—
(A) the employer of such creator, nor
(B) related to such creator (within the meaning of subsection (d)).
(c) Effective date
This section shall be applicable with regard to any amounts received, or payments made, pursuant to a transfer described in subsection (a) in any taxable year to which this subtitle applies, regardless of the taxable year in which such transfer occurred.
(d) Related persons
Subsection (a) shall not apply to any transfer, directly or indirectly, between persons specified within any one of the paragraphs of section 267(b) or persons described in section 707(b); except that, in applying section 267(b) and (c) and section 707(b) for purposes of this section—
(1) the phrase 25 percent or more shall be substituted for the phrase more than 50 percent each place it appears in section 267(b) or 707(b), and
(2) paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants.
(e) Cross reference
For special rule relating to nonresident aliens, see section 871(a).
(Aug. 16, 1954, ch. 736, 68A Stat. 329; Pub. L. 85–866, title I, §54(a), Sept. 2, 1958, 72 Stat. 1644; Pub. L. 94–455, title XIV, §1402(b)(1)(V), (2), Oct. 4, 1976, 90 Stat. 1732; Pub. L. 98–369, div. A, title I, §174(b)(5)(C), title X, §1001(b)(19), (e), July 18, 1984, 98 Stat. 707, 1012; Pub. L. 105–206, title V, §5001(a)(5), title VI, §6005(d)(4), July 22, 1998, 112 Stat. 788, 805.)
Amendments
1998—Subsec. (a). Pub. L. 105–206, §6005(d)(4), substituted 18 months for 1 year in introductory provisions.
Pub. L. 105–206, §5001(a)(5), substituted 1 year for 18 months in introductory provisions.
1984—Subsec. (a). Pub. L. 98–369, §1001(b)(19), (e), substituted 6 months for 1 year, applicable to property acquired after June 22, 1984, and before Jan. 1, 1988. See Effective Date of 1984 Amendment note below.
Subsec. (d). Pub. L. 98–369, §174(b)(5)(C), substituted section 267(b) or persons described in section 707(b) for section 267(b) and section 267(b) and (c) and section 707(b) for section 267(b) and (c) in introductory provisions, and substituted section 267(b) or 707(b) for section 267(b) in par. (1).
1976—Subsec. (a). Pub. L. 94–455, §1402(b)(2), provided that 9 months would be changed to 1 year.
Pub. L. 94–455, §1402(b)(1)(V), provided that 6 months would be changed to 9 months for taxable years beginning in 1977.
1958—Subsec. (d). Pub. L. 85–866 substituted provisions set out as subsec. (d) for provisions reading Subsection (a) shall not apply to any sale or exchange between an individual and any other related person (as defined in section 267(b)), except brothers and sisters, whether by the whole or half blood.
Effective Date of 1998 Amendment
Amendment by section 5001 of Pub. L. 105–206 effective Jan. 1, 1998, see section 5001(b)(2) of Pub. L. 105–206, set out as a note under section 1 of this title.
Amendment by section 6000(d)(4) of Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.
Effective Date of 1984 Amendment
Amendment by section 174(b)(5)(C) of Pub. L. 98–369 applicable to transactions after Dec. 31, 1983, in taxable years ending after that date, see section 174(c)(2)(A) of Pub. L. 98–369, set out as a note under section 267 of this title.
Amendment by section 1001(b)(19) of Pub. L. 98–369 applicable to property acquired after June 22, 1984, and before Jan. 1, 1988, see section 1001(e) of Pub. L. 98–369, set out as a note under section 166 of this title.
Effective Date of 1976 Amendment
Pub. L. 94–455, title XIV, §1402(b)(1), Oct. 4, 1976, 90 Stat. 1731, provided that the amendment made by that section is effective with respect to taxable years beginning in 1977.
Pub. L. 94–455, title XIV, §1402(b)(2), Oct. 4, 1976, 90 Stat. 1732, provided that the amendment made by that section is effective with respect to taxable years beginning after Dec. 31, 1977.
Effective Date of 1958 Amendment
Pub. L. 85–866, title I, §54(b), Sept. 2, 1958, 72 Stat. 1644, provided that: The amendment made by subsection (a) [amending this section] shall apply with respect to taxable years ending after the date of the enactment of this Act [Sept. 2, 1958], but only with respect to transfers after such date.
U.S. Encyclopedia of Law Coverage
26-U.S.C.-1212 in the Legal Encyclopedia: Income Taxes
In this entry about 26-U.S.C.-1212, find legal reference material, bibliographies and premiere content related to income taxes in the American Encyclopedia of Law, presenting a comprehensive view of the United States income taxes-specific issues, written by authorities in the field.
26-U.S.C.-1202 in the Legal Encyclopedia: Tax Liability
In this entry about 26-U.S.C.-1202, find legal reference material, bibliographies and premiere content related to tax liability in the American Encyclopedia of Law, presenting a comprehensive view of the United States tax liability-specific issues, written by authorities in the field.
26-U.S.C.-1201 in the Legal Encyclopedia: Taxation
In this entry about 26-U.S.C.-1201, find legal reference material, bibliographies and premiere content related to taxation in the American Encyclopedia of Law, presenting a comprehensive view of the United States taxation-specific issues, written by authorities in the field.
Title 26 – Internal Revenue Code in the Legal Encyclopedia: Capital Gains
In this entry about Title 26 – Internal Revenue Code, find legal reference material, bibliographies and premiere content related to capital gains in the American Encyclopedia of Law, presenting a comprehensive view of the United States capital gains-specific issues, written by authorities in the field.
Leave a Reply