June L. Myers v. United States

This is an appeal from a judgment denying June L. Myers’ (taxpayer) claim for a refund of taxes. The refund claim relates to her royalty proceeds from the transfer of her interest in a patent application and whether such proceeds should be taxed as ordinary income or capital gain. The District Court found that a patent application, for which a “notice of allowance” has been received prior to transfer, had “sufficiently matured” so as to be property subject to an allowance for depreciation and that the proceeds from such transfer are taxable as ordinary income. 26 U.S.C.A. (I.R.C.1954) § 1239(b). We affirm.

FACTS:

In the instant action, taxpayer’s late husband applied for a patent (Patent Application No. 777,321). On January 31, 1963 the Patent Office issued a formal “notice of allowance” of the patent application and requested the $30.00 final fee be paid for the issuance of Letters Patent. On June 29, 1963 Appellant Myers transferred and granted to Myers Electric Products, Inc., her wholly owned corporation, the “sole and exclusive right, privilege and license to use, manufacture, produce and sell the invention covered by Patent Application No. 777,321 for a period of 20…