Originally Posted by quantum1
I have a friend , who sold some public IP addresses and made this money early this year feb , 2016
this person does not have any retirement funds right now
what would be some options to protect this money from taxes?
he is not married and does not own a home , any advice would be helpfull
every income is taxable UNLESS it is exmpt from taxation by tax lawIn general, if you have to ask whether you need to report certain income to the IRS, the most likely answer is, ?Yes
While the IRS doesn't tax intangible assets, it does tax income from them. IP can produce income for your small business. That income is taxed by the IRS. Intangible assets do not depreciate like a vehicle or a building. Instead, you can deduct the expenses for creating the intangible asset. This includes your research and development costs, legal fees and licensing fees for creating IP.as your business sells an intangible asset , an IP, you must pay tax on the sale as regular income. Only song catalogs can be sold and taxed at the capital gains rate. You must determine your cost basis for intangibles. According to the IRS, the cost basis for the IP includes fees for attorneys and licenses. Neither the inventor's time nor the author's time can be counted as part of the cost basis. For research and development, if you deduct associated costs as current business expenses, you may not count them as part of the cost basis. You pay tax on any income from the sale of an intangible above the cost basis.