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Old 09-17-2016, 08:00 AM
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Patent Sale - Best Way?

Location: NEW JERSEY

My friend and I co-own a U.S. Patent that we are Interested in Selling.
On our patent, it says the name or our company, followed by 'LLC'.

We never Registered our company as an LLC;
does this matter in the way of taxes?

Also, what would we pay in taxes?
I think New Jersey is 7%?
What are the federal taxes that we'd have to pay?

I am a low income adult with disabilities, living on Social Security.
My business partner/co-inventor, owns a small business.

Thank you for any information you can provide.
Much appreciated.

mpac165



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Old 09-17-2016, 09:23 AM
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Join Date: Sep 2016
Posts: 3
More Info:

Location: New Jersey
Owner #1: Low Income Disabled Adult on Social Security.
Owner #2: Very Small Business Owner.

Tax Issues:
Co-Owners of Patent.
On our Patent, it states our individual names, and our company name, followed by 'LLC'.
We Never Registered as an 'LLC'. We Only Registered the Company/name.
We are Not selling our company/name.
We are Just Selling our Patent; which, happens to be the only asset OF our company.

The only 'work' ever performed, was placing an ad on craigslist looking for someone to license our products. We found a licensee, and our patents products were licensed for a few years; then we legally seperated. The patent has been 'on the shelf', ever since.

We now have a few parties interested in buying our patent for about $50K+ 2% Royalties.

What is the best way to go about paying as little as possible in taxes on the sale of the patent?
Do we sell Just the patent, or the entire company/patent included?
If we sell just the patent, we are likely to dissolve the company after that.
What will we likely Net of the $50K to Divide between the two owners of patent and company?

Also, what is the best way to divide the money;
is it as easy as taking the money out of the bank?
- are there any other tax implications, individually?

Thank You for ANY Information You Can Provide.
Really. MUCH Appreciated.



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Old 09-17-2016, 04:21 PM
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Posts: 5,233
We never Registered our company as an LLC; =>>then your MMLLC is not actually treated as an MMLLC in your home state;you need to register yourLLC with your state secretary of state corp div.



does this matter in the way of taxes? ====>>Yes I think so UNLESS you are lawfully registered with your state secretary of state corp. div. you need to contact them for more accurate info


Also, what would we pay in taxes?
I think New Jersey is 7%?
What are the federal taxes that we'd have to pay? ===>As an MMLLC,
A LLC is not a separate tax entity like a corporation; instead, it is what the IRS calls a "pass-through entity," like a partnership or sole proprietorship. All of the profits and losses of the LLC "pass through" the business to the LLC owners /members, who report this information on their personal tax returns. The LLC itself does not pay federal income taxes, but some states impose an annual tax on LLCs.



I am a low income adult with disabilities, living on Social Security.
My business partner/co-inventor, owns a small business.==>>You need to contact the your state of secretary corp div asap for more info in detail.



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Old 09-17-2016, 05:20 PM
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Thank you

Thank you very much for that information.
Since our company is not an LLC
- do I need to register as an LLC?
- is it necessary?
NOT registering as an LLC - how does that affect the taxes, if at all?

Okay, so basically, our company sells the patent, we split the profits, pay taxes, then dissolve the company, sound good?



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Old 09-18-2016, 08:25 AM
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Posts: 5,233
Quote:
Originally Posted by mpac165 View Post
Thank you very much for that information.
Since our company is not an LLC
- do I need to register as an LLC?
- is it necessary?
NOT registering as an LLC - how does that affect the taxes, if at all?

Okay, so basically, our company sells the patent, we split the profits, pay taxes, then dissolve the company, sound good?
- do I need to register as an LLC? ==If you want yes but .it is up to you; Choosing the right form for your business may be important to your future success. You need to choose What the right structure for your business is. however as you said,?
On our Patent, it states our individual names, and our company name, followed by 'LLC'.?>then, since your biz form that want is an MMLLC,as an MMLLC(just like a partnership) , you need to register the biz as an MMLLC with the your state secretary of state. A LLC is a legal entity formed under state law to run a business
You also said,? We Only Registered the Company/name.?===> UNLESS you registered the biz as an LLC, you can not use the term LLC;

- is it necessary? =>.As said , forming your biz as an LLC is NOT necessarily; if you want you may incorporate your biz as an S or regular C corp or LLC;What I mean is that if you want you may set up your biz as a LLC and elect it tobe taxed as a S corp or a C corp or etc.



NOT registering as an LLC - how does that affect the taxes, if at all? ==>it depends; I can ot explain all .. takes too much time; so you need to decide your biz form first then let me know.aas said, An LLC is an entity created by state statute. Depending on elections made by the LLC and the number of members, the IRS will treat an LLC either as a corporation, partnership, or as part of the owner?s tax return (a disregarded entity). Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation. An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation.

Okay, so basically, our company sells the patent, we split the profits, pay taxes, then dissolve the company, sound good?=>then you may form it as aMMLLC LLC (partnership) I mean ; however it is up to you if you want to form your biz as a LLC elected to be treated s a S corp or C corp or just a LLC as a partnership. You may contact an IRS enrolled agent /a CPA doing taxes in your liocal area form profession l help.



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