J. M. & M. S. Browning Co. v. Commissioner
United States Board of Tax Appeals
1. License agreements for the use of patents are intangible property. The right to receive royalties thereunder is likewise intangible property and when paid into a corporation for a nominal consideration can not be included in invested capital under section 326(a)(3) of the Revenue Act of 1918. 2. The fair market value as of January 2, 1915, of right to receive royalties under certain license agreements, and the manner of computing the deduction for the exhaustion thereof,…
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1. License agreements for the use of patents are intangible property. The right to receive royalties thereunder is likewise intangible property and when paid into a corporation for a nominal consideration can not be included in invested capital under section 326(a)(3) of the Revenue Act of 1918. 2. The fair market value as of January 2, 1915, of right to receive royalties under certain license agreements, and the manner of computing the deduction for the exhaustion thereof, determined. 3. The petitioner accepted a lump sum in lieu of the royalties which would be payable under contracts owned…
1Opinion of the Court
*925OPINION.
Marquette:
It may be stated at the outset that the several contracts involved herein are license agreements, authorizing the licensees to make and sell certain firearms covered by patents owned by J. M. and M. S. Browning, and as to the Brownings, the right to receive royalties thereunder. We have heretofore held in the Appeal of Dwight & Lloyd Sintering Co., 1 B. T. A. 179, that license agreements for the use of patents are intangible property within the meaning of the Revenue Act of 1917. In that appeal we said:
The taxpayer relies upon article 811 of Regulations 45 in support of its…
2Cited by3 opinions
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