Patent income is the income produced from an exclusive right to an invention. A patent’s life is usually two decades from software. When the patent expires, others are longer prohibited from copying the invention no. Patent income might not necessarily be tax-free. There are instances that patent income is taxable. The income produced from patents may be at the mercy of business and profession (B&O) taxes. To determine if patent income is taxable, one must first see whether the earnings are classified as business or non-business. To regulate how to report patent income on the tax return one should segregate business income from non-business income.
The B&O tax pertains to income produced from patent royalties and patent sales if the said income is considered regular, repeated, and a continuing part of business activities. • If the inventor earns patent royalties for the right to use a trademarked process or to manufacture a patented product. • If the income is from the sale of a patent by the inventor. • If an investment firm generates patent royalties from patents and other intangible assets (such as copyrights) it is the owner of for investment purposes. In these situations, the patent income is known as an ongoing area of the business operations since it is necessary to continue the business.
Another concern is to determine where in fact the owner resides. B&O tax pertains to patent income if the owner lives or has a commercial residence in Washington. Banking, loan, security, and other financial businesses getting patent income is also necessary to pay B&O tax under the classification – service and alternative activities.
There instances that income produced from patent royalties is exempt from tax. This is the provision under Section 234 TCA 1997. You’ll find so many conditions to have the ability to implement this rule. Another example when patent royalty is exempt is if the patent income is a non-business income. For the non-financial business, one must know who is the owner of the privileges to a patent and if it is utilized mainly for investment purposes. If this is the case, the patent income is not subject to B&O tax then.
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For a patent to be considered kept totally for investment purposes, the income must not be used for business purposes or found in conducting regular trade or for business operations. • If a producer who owns the privileges to a patented manufacturing process instead uses another process and then markets the patent.
• Patent royalty income generated by somebody who purchased the patent and other opportunities for purely speculation purposes. This person does not own a business. Patent income is not taxable in the above-mentioned examples because the activities are casual in nature and the income is not regular and ongoing. Therefore, such patent income is not at the mercy of B&O taxes.
We all need to focus on our writing. Because the millions of visitors out there don’t value your site. They aren’t looking for you on Twitter and avoiding your books based on the responses of others. They aren’t taking one superstar reviews seriously. It is rather easy to obsess in this business. But I haven’t seen a single shred of proof that obsession helps careers. The basic thing that I have seen, and over-over, are people finding success by writing good books.
I really think it is possible to make a very nice living by writing rather than worrying about other things. Most of us want to believe we’re doing something better for our careers, so we misuse social mass media, buy ads, rigorously protect our good name, cultivate media connections, make looks, and celebrate our very own very minor celebrity.
Let it all go. Spend your time working on your books. That is the only thing that matter, and the thing you have control over. I hope everyone reading this has an extremely successful 2013. Year Happy new. I’ll get most of my real-life shit together. 1. Incorporating and paying quarterly fees.