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If you're a serious composer or a budding Cole Porter or Paul Simon, this item is "de-lovely" and just for you.
Generally speaking, the tax code has not treated musical compositions and copyrights in musical works as capital assets.
That is, a song or symphony has not been treated the same way as, say, a stock. If you hold a stock for a year and sell it, you qualify for a lower tax rate on the gain.
However, you can elect to treat these types of property as capital assets if you sell or exchange them in tax years beginning after May 17, 2006, and:
- Your personal efforts created the property.
- Or you acquired the property under circumstances that entitle you to what the Internal Revenue Service calls the cost basis of the person who created the property or for whom it was prepared or produced. The most typical circumstance would be if the composer gave you the rights to the music.
Published Dec. 6, 2007
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