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Posted by Seth Breidbart on June 23, 2006, 3:10 am
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> Seth Breidbart enlightened me by writing:
>> If you're selling everything, the code, the copyrights,
>> the buyer gets any future licensing or upgrade fees from the
>> current licensees, etc. then I'd say it's capital gains.
> It would in fact be everything relating to that business.
> Software source, customer lists, upgrade revenue,
> intellectual rights, supporting products and their sources,
> website/domain name, the whole kit and kaboodle.
Then by analogy with a similar case in meatspace, I'd say
it's capital gains.
Warning: according to the same analogy, _next time_ it's
ordinary income.
The case I'm thinking of (which I read about many years ago
and don't have a cite for) is a man who started a diner.
After a few years, his wife got transferred to another city,
so he sold the diner as a going business for a lot more
money than he'd ever made running it. That was capital
gains.
In the new city, he opened a diner and ran it for a few
years, then sold it. The IRS ruled (and I believe a court
agreed) that he was now in the business of starting and
selling diners, hence the proceeds were ordinary income.
Seth
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