The assets at issue were contractual rights to a joint development agreement, rights to service contracts, rights to a confidentiality agreement with the manufacturer, the taxpayer's proprietary technology, and goodwill. The taxpayer did not create or purchase the assets for investment purposes and did not assign the assets a book value before the sale. Because none of the assets were created or purchased for investment purposes, and the taxpayer had not assigned a book value to the assets, the Comptroller determined that there was no evidence that the assets were capital assets or investments. As a result, the net gain calculation in Rule 3.591(e)(2) was not applicable.
The letter further provided that the taxpayer should use the same allocation of the sales price to specific assets as used by the taxpayer for federal income tax purposes. The Comptroller plans to amend Rule 3.591 to clarify the definition of an "investment."
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