"G Burton" <burton.garyNOS...[at]comcast.net> wrote:

- quote -

Gary,

Given the circumstances, it might be best to hire a tax
attorney. In fact, you may want to pay a tax attorney to
prepare a written opinion, as it may help you avoid
penalties if you report the transaction incorrectly.

Kreig Mitchell
www.irstaxtrouble.com
www.irstaxtrouble.com/blog.htm

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I have a patent, for which I have been taking business
deductions for some time. I have not sold the rights to the
invention, although that is still a possibility. I also no
longer have my business.

It was my intention to deduct the patent maintenance
expenses (and the costs of trying to sell the patent) as an
investment expense on Schedule A, but now I see that it is
susceptible to the 2% AGI limit.

Due to some previous bad advise, some of my patent costs are
capitalized and others are expensed. Explaining the reason
for that consists of a long story that I won't repeat unless
someone thinks it's necessary.

* I understand that costs for trying to sell the patent
might be considered as an investment expense. Even if so, I
don't think it is the IRS's intent to make the direct patent
costs subject to limitations. I am willing to capitalize
the patent expenses if I must, but I know of no way to do
it.

Should I capitalize? If so, how?

* Suppose I never sell the patent before it expires. In
that case: May I write off all the capitalized expenses at
that time? If so, what would be an acceptable depreciation
period?

--
Gary Burton

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >