Ned Newell transferred all substantial rights to a trade secret to an unrelated third party for $25,000. Ned must report the entire proceeds as ordinary income.

Question

Quizplus · Accepted Answer

If substantially all rights are transferred, the transaction is treated as a sale and not a licensing agreement. A trade secret is an intangible asset and is not excluded in the capital asset deﬁnition.

Ned Newell Transferred All Substantial Rights to a Trade Secret