Hiram Is a Computer Engineer And,while Unemployed,invents a Switching Device

Hiram is a computer engineer and,while unemployed,invents a switching device for computer networks.He patents the device,but does not reduce it to practice.Hiram has a zero tax basis for the patent.In consideration of $800,000 plus a $1 royalty per device sold,Hiram assigns the patent to a computer manufacturing company.Hiram assigned all substantial rights in the patent.Which of the following is correct?

A) Hiram automatically has long-term capital gain from the lump sum payment,but not from the royalty payments.
B) Hiram automatically has long-term capital gain from the royalty payments,but not from the lump sum payment.
C) Hiram automatically has long-term capital gain from both the lump sum payment and the royalty payments.
D) Hiram does not have automatic long-term capital gain from either the lump sum payment or the royalty payments.
E) None of these.