James R. Watkins and Lucile L. Watkins v. United States

MOORE, Circuit Judge.

The primary question on this appeal is whether royalty payments received by an inventor, James R. Watkins, and his wife (the taxpayers), during the years 1949 through 1952 from an assignment of the patents should have been treated as capital gains derived from a sale of assets held more than six months (i. e. payments on account of the purchase price of the patents) or were merely ordinary income received under a licensing agreement. The district court held that the payments were properly taxed at income tax rates and denied the plaintiffs’ claim for a refund.

The…