The federal income taxation of patents and other intellectual property is an area that requires planning to determine the right tax treatment for your particular situation. In this article I will address legal fees and costs related to obtaining a patent. Attorneys" fees expended in conjunction with making and perfecting a patent application are considered "research or experimental expenditures" under section 174 of the Internal Revenue Code. Under the tax code, taxpayers have two options regarding research expenses: 1) deduct their research expenses in the year incurred, or 2) capitalize the expenditures and amortize … [Read more...]