A provision included in the Tax Cuts and Jobs Act (TCJA) stipulates that certain self-created intangible assets don’t qualify as capital assets for federal income tax purposes.

This is bad news. It means gains from selling these assets are ineligible for tax-favored long-term capital gains rates.

Here’s what you need to know about the tax outcome when you sell self-created intangibles.

Self-Created Intangible Assets That Are Not Capital Gains Property

The following intangible assets are treated as self-created non-capital assets:1

A patent held by a taxpayer whose personal efforts created the patent

An invention, model, or design (whether patented or not) held by a taxpayer whose personal efforts created the asset

A secret formula or process held by a taxpayer whose personal efforts created the asset

A copyright held by a taxpayer whose personal efforts created the copyright

Literary, musical, or artistic compositions held by the taxpayer whose personal efforts created them

Letters, memorandums, or similar property that were not created by the taxpayer ... Log in to view full article.