Lee was the holder of a patent on a wireless modem.During 2011,he sold all substantial rights in the patent for $365,000 in cash and a 2% royalty on the purchaser's first $10,600,000 of sales each year related to the product in which the patent is incorporated.Lee had not reduced the patent to practice.He had a $56,000 basis for the patent.During 2011,he received $10,000 in royalties.What is the nature and amount of Lee's gain?

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The Answer of Lee was the holder of a patent on a wireless modem.During 2011,he sold all substantial rights in the patent for $365,000 in cash and a 2% royalty on the purchaser's first $10,600,000 of sales each year related to the product in which the patent is incorporated.Lee had not reduced the patent to practice.He had a $56,000 basis for the patent.During 2011,he received $10,000 in royalties.What is the nature and amount of Lee's gain?

Lee Was the Holder of a Patent on a Wireless