Hidasu Is a Mechanical Engineer And,while Unemployed,invents a Switching Device

Hidasu is a mechanical engineer and,while unemployed,invents a switching device for computer networks.He patents the device,but does not reduce it to practice.Hidasu has a zero tax basis for the patent.In consideration of $600,000 plus a $2 royalty per device sold,Hidasu assigns the patent to a computer manufacturing company.Hidasu assigned all substantial rights in the patent.Which of the following is correct?

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