Gifts of Intellectual Property
The democratization of technology means that more people are able to create and transfer intellectual property to a charitable cause such as UCR.
What is a gift of intellectual property?
Intellectual property is an intangible asset that refers to a "creation of the mind." The most common forms of intellectual property are copyrights, patents, and trademarks. Other types of intellectual property may include trade secrets, royalty interests, and other intangible property, as well as artworks, musical compositions, and other similar property rights.
Example : When an idea is created which may result in future monetary gains, the first legal step to protect that idea is a patent. This idea could be something as simple as an insider process which becomes the foundation to your company's success, or as complex as a new invention. The creation of this patent initiates the process of turning your intangible asset (the intellectual property you created or own) into a tangible, legally recognized asset. This type of asset can become a tax-deductible charitable gift, which is a benefit to both you and UCR.
Benefits of gifts of intellectual property
Intellectual property is an increasingly popular form of charitable giving. Such gifts can offer attractive tax-planning advantages. To assure that the full tax benefits these gifts are obtained, donors should work closely with representatives of the charity involved, and with their own tax advisors.
There are two primary ways to earn a tax deduction for your intellectual property asset from UCR:
Option 1: You have the right to potentially receive the full-face value of your intellectual property as a tax deduction at the time of donation.
( Note: A deduction for a patent is the lesser of the taxpayer's basis in the patent or its fair market value. The creator of a patent may have a very low cost basis, meaning the deduction may be far less than fair market value. )
Option 2: You can continue to receive tax benefits based on any royalties or other monetary gains received by the asset. You can potentially earn years of additional tax deductions with one intellectual property donation to UCR. As patents rise, so will the future restrictions on this type of tax-deductible gift. Lock in your benefits for this year before the IRS regulations tighten.
If you have any questions about gifts of intellectual property, please contact us. We would be happy to assist you and answer any questions you might have.