Capital Gains Jabberwocky: Capital Gains, Intangible Property, and Tax

40 Pages Posted: 17 May 2013

See all articles by Steve Black

Steve Black

Texas Tech University School of Law

Date Written: May 16, 2012


In the current US tax system, capital gains are taxed at a lower rate than ordinary income. What does that mean for the sale of IP and intangible assets? Is it possible to convert ordinary income to capital gain by changing the form of the transaction? This article will address anomalies in the tax characterization of intangible assets. Four cases will be presented, each of which, arguably, could consistently produce capital gains. As will be shown, however, the treatment of these cases (and others) is anything but consistent. At the conclusion of the four cases, it should be clear that the inconsistency is systemic, which in turn will lead us to ask whether (1) none of these intangible assets should receive capital gains treatment or (2) whether all of them should.

Keywords: tax, capital gains, taxation, intangible assets, intellectual property, IP

JEL Classification: H2, H20, H25, H21, H71, K34, O34, D23, K11

Suggested Citation

Black, Steve, Capital Gains Jabberwocky: Capital Gains, Intangible Property, and Tax (May 16, 2012). Hofstra Law Review, Vol. 41, No. 359, 2012, Available at SSRN:

Steve Black (Contact Author)

Texas Tech University School of Law ( email )

3311 18th Street
Lubbock, TX 79409
United States
8068341604 (Phone)

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