Mr. and Mrs. Sykes operate a very profitable small business. This year, the Sykes recognized a $100,000 gain on sale of a trade name they had created and copyrighted for use in their business. Which of the following statements is true?
A) The $100,000 gain is capital gain eligible for a preferential tax rate.
B) The $100,000 gain is capital gain against which the Sykes can deduct any capital losses recognized this year.
C) The $100,000 gain is ordinary business income.
D) Statements A and B are true.

Question

Quizplus · Accepted Answer

The gain from the sale of a trade name created and used in a business is considered ordinary income, not a capital gain, because it is an intangible asset created by the business.

Mr and Mrs