inventor is sole owner of a corporation inventor signs away all right in a patent to the corporation can corporation pay inventor royalties on the patent, after inventor has signed all rights away to the corporation?
Let me guess. You set up this coporation and the agreement without an attorney and a tax professional?
The very simple problem you will face when audited is an IRS auditor recalassifying your royalties as dividends so they can be taxed on the corporate return and again on your return.
The auditor my choose to disallow the corporation and treat the royalties as paid to you and tack on the interest and penalties related to not filing a Schedule C.
You need a tax professional and then an attorney.
Dick
Sure. Why not?
Legally of course, if the inventor has really assigned "all rights" to the corporation though, the corporation is likely under no legal obligation to do so. But that wouldn't make it illegal for the corporation to pay out a royalty if they chose. Best Regards,
-- Todd H.
There's no tax rule against it. So your answer will depend on the agreement by which the inventor "signed all rights away." Talk to the lawyer who set up the deal in the first place. Stu
This seems to be a question of contract law, not tax law. Not being a lawyer, but having been in a similar situation, I would say that the corporation could decide to change its mind and offer the inventor a royalty. The corporation obviously has no obligation to do so.
However, if I were in your situation I would check with a real lawyer instead of me :-)
-- Vic Roberts Replace xxx with vdr in e-mail address.
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