Downs v. Comm'r
United States Tax Court
Petitioner received from American Metal monthly payments of $ 1,000 during 1959 for his efforts in designing an electric hospital bed under a contract which called for assignment without further consideration of the rights to all inventions conceived and developed during his "employment" with the company.
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Petitioner received from American Metal monthly payments of $ 1,000 during 1959 for his efforts in designing an electric hospital bed under a contract which called for assignment without further consideration of the rights to all inventions conceived and developed during his "employment" with the company. Held, the payments were compensation for services rendered and are taxable as ordinary income under sec. 61(a)(1), I.R.C. 1954. Held, further, business expense deductions under sec. 162, I.R.C. 1954, denied with respect to rent and utility expenses on petitioners' personal residence but…
1Opinion of the Court
OPINION
The principal issue in this case is whether payments of $12,750 received by petitioner in 1959 from American Metal were consideration for the transfer of all substantial rights to a “patent” within the provisions of section 1235,3 as contended by petitioner, or were compensation for services rendered within the meaning of section 61 (a) (1),4 as asserted by respondent.
Briefly stated, section 1235 provides that a transfer of property consisting of all substantial rights to a patent by an individual whose efforts created the property is treated as the sale of a capital asset held for…
2Cases cited7 opinions
- Standard Parts Co. v. PeckSupreme Court of the United States · 1924
- Koons v. CommissionerUnited States Tax Court · 1961
- Blum v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1950
- Martin v. CommissionerUnited States Tax Court · 1965
- Karl R. Martin and Kathleen Martin v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1967
2 more not listed; retrieve them via the Exa API.
3Cited by22 opinions
- Turner v. CommissionerUnited States Tax Court · 1971
- Bennett Paper Corp. & Subsidiaries v. CommissionerUnited States Tax Court · 1982
- Beausoleil v. CommissionerUnited States Tax Court · 1976
- Ofria v. CommissionerUnited States Tax Court · 1981
- Boulez v. CommissionerUnited States Tax Court · 1984
17 more not listed; retrieve them via the Exa API.