Cost of Patent

[Acownt4it]

Taxpayer has created a drawing for a new mechanical "thingy". He has filed for a patent on this "thingy". It cost him $5000 in 2006.

Can I show this as a business loss anywhere on his return?

This "thingy" when finalzed and produced will be business income for him.

[ChEAr$]

The "thingy"

Taxpayer has created a drawing for a new mechanical "thingy". He has filed for a patent on this "thingy". It cost him $5000 in 2006.

Can I show this as a business loss anywhere on his return?

This "thingy" when finalzed and produced will be business income for him.

And there's your answer. Patent costs are capitalized and amortized when the "thingy"
goes on the market.

But if like my client, who's thingy never made it, his 15,000$ became a capital loss,
3000 per year.

[Acownt4it]

Thanks

"Thingy" shows my technical expertise.

Thank you for the prompt reply, I really wasn't sure what to do with it.

[farm girl]

At what point

But if like my client, who's thingy never made it, his 15,000$ became a capital loss, 3000 per year.

do you take the capital loss? I have a client that is applying for a patent but doubt that anything will become of it. Do you need to wait until the patent runs out to claim the loss?

[ChEAr$]

good question there

do you take the capital loss? I have a client that is applying for a patent but doubt that anything will become of it. Do you need to wait until the patent runs out to claim the loss?

In my client's case, his invention never made it to the patent stage. All his "investment"
went to one of those web based invention ... people who took his money.

However, if a patent is issued, then all costs go into said patent. So the question then
becomes at what point after that is the patent worthless? Answer depends on when all
marketing efforts are fruitless and there's no hope of further success, not necessarily as
long as the patent lasts. What, 17 years max? Used to be I think.