Posted on 02/13/2014 4:06:57 AM PST by knarf
Okay. Capital gains are like this. We bought some property in 2000 with the intention of building a house. We didn’t and sold the property in 2012 and made a little money on it (should have sold it at the peak. DOH!) Anyway, since it was classified as a “long term” investment, we owed no taxes on the “gain” we got on our initial “capital” investment.
Royalties are not capital gains.
It is not a asset growing in value. It is the selling of a commodity.
You’re correct.
I went back and read the post.
So what will passive income such as royalties be treated.
My income is pretty much royalty.
That is I do something once and get paid on it over and over , year after year.....
I occasionally get upfront monies from vendors but, mostly I earn residual like from an oil well, singing a song or making a movie.
Oil well royalties are not like movie rights royalties.
With the movie, you do the work once and other people use the same product over and over without diminishing the initial product.
Oil royalties is more like selling apples from your roadside stand. Each barrel of oil goes away from your possession, it is consumed by others and gone forever.
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