On January 5, 2012, Ernest Earner Sells His Patent (Basis

On January 5, 2012, Ernest Earner sells his patent (basis of $0) for a machine to a company which will manufacture the machine. He receives $150,000 plus $15 for each machine manufactured. In 2012, 10,000 machines were manufactured. What amount(s) must Ernest report on his 2012 tax return?

A) $150,000 long-term capital gain; $150,000 ordinary income
B) $150,000 short-term capital gain; $150,000 ordinary income
C) $300,000 short-term capital gain
D) $300,000 long-term capital gain