How can patent damages be taxed as capital gains?

IP Litigation
Written By Klemchuk LLP

Tax experts have seen a new trend where patent damages are being treated as capital gains.  This can happen because:

  • section 1235 allows qualification for capital gains when the money award is tied to a transfer of all rights to the patent (sale); and

  • the law has historically made exceptions for patents.

Read about how settlements and awards for patent damages can be treated as capital gains rather than ordinary income.

Klemchuk LLP

This blog is published by Klemchuk LLP, a litigation, intellectual property, transactional, and international business law firm dedicated to protecting innovation. The firm provides tailored legal solutions to industries including software, technology, retail, real estate, consumer goods, ecommerce, telecommunications, restaurant, energy, media, and professional services.

The firm publishes Ideate, a blog discussing the latest news and insights into intellectual property law, business, and culture.

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