may want to consider donating intellectual
property to a non-profit institution, such
as a charity or university. Such a donation
may have tax advantages for the donor. In
this regard, the American Jobs Creation
Act, which was enacted on October 22, 2004,
allows tax deductions for donated intellectual property.
Previously, donors could deduct the fair
market value of the items, including their
potential to bring in future income, whether
or not the charity ever realized the income.
However, under the Jobs Creation Act, donors
are now limited to deducting either the
amount they spent to create the item of
intellectual property or its fair market
value, whichever is smaller. The Jobs Creation
Act also requires companies and individuals
to provide an appraisal before deducting
donations of intellectual property worth
more than $5,000. These intellectual property
gift provisions apply to gifts made after
June 3, 2004.
There are other reasons to donate intellectual
property in appropriate circumstances. For
example, a business owner may want to donate
intellectual property if the business no
longer sells the product or provides the
service covered by the intellectual property.
Also, donation of intellectual property,
such as patents, allows the business owner
to avoid maintenance fees and internal administrative
costs associated with keeping a patent active.
One should consult his tax advisor and intellectual
property attorney in any particular situation