Martin Elwood has purchased the rights to a group of songs written by the Ringtones. He estimates that these songs will produce royalties of about $100,000 per year for at least 5 years. He does not have plans to acquire additional song rights. Explain whether the royalties he receives would be treated as business income or property income. In addition, indicate how any gain or loss on their disposition would be taxed.

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The Answer of Martin Elwood has purchased the rights to a group of songs written by the Ringtones. He estimates that these songs will produce royalties of about $100,000 per year for at least 5 years. He does not have plans to acquire additional song rights. Explain whether the royalties he receives would be treated as business income or property income. In addition, indicate how any gain or loss on their disposition would be taxed.

Martin Elwood Has Purchased the Rights to a Group of Songs