Income from intellectual property continues to be an increasing contributor to economic growth. Too often, however, the creator and financial advisor find themselves in a gray area when it comes to the changing tax laws surrounding patents and copyrights. Proper planning and a clear understanding of the most recent developments are essential when it comes to affecting the creator’s tax liability. In a thorough article from the AICPA’s The Tax Advisor, some of the most important issues regarding intellectual property and income are addressed, including: royalties as business and non-business income, appropriate deductions, exemptions from uniform capitalization rules, sale or exchange of intellectual property, inheritance issues, and more.
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