The recapture rule in patents prohibits a person from reclaiming a previously surrendered claim in order to obtain approval for a patent. This rule serves as a defence in infringement lawsuits, allowing the defendant to challenge the validity of the new patent. Attempting to reclaim a surrendered claim is considered deceptive and is not permitted.
The recapture rule in patent law prohibits a patent holder from reclaiming a previously abandoned claim in order to obtain patent approval. This means that if a patent holder relinquished a claim during the approval process, they cannot later attempt to regain that claim through a reissue patent. For instance, if a patent holder initially submitted a patent application with ten claims but abandoned one of those claims to secure approval, they cannot subsequently reclaim the abandoned claim through a reissue patent. The purpose of the recapture rule is to prevent patent holders from strategically abandoning claims during the approval process and then seeking to reclaim them later through a reissue patent. This would be unjust to competitors who may have relied on the abandoned claim while developing their own products.
The recapture rule is a tax provision that requires taxpayers to report as ordinary income any previously claimed depreciation deductions when they sell or dispose of property for a gain.
The recapture rule applies when a taxpayer sells or disposes of property for a gain and has previously claimed depreciation deductions on that property.
Recapture is calculated by taking the amount of depreciation deductions previously claimed and multiplying it by the applicable recapture tax rate, which is typically 25%.
There are certain exceptions to the recapture rule, such as when the property is sold at a loss or when it is transferred as a gift.
Tangible personal property, real property, and intangible property such as patents and copyrights are all subject to recapture if depreciation deductions have been claimed.
The recapture rule can increase your tax liability in the year of sale or disposition, as the recaptured depreciation is reported as ordinary income.
There are certain provisions, such as like-kind exchanges under Section 1031 of the Internal Revenue Code, that allow taxpayers to defer recapture by reinvesting the proceeds in similar property.
Taxpayers should maintain records of all depreciation deductions claimed and the original cost basis of the property to support recapture calculations.
Rental property is subject to the recapture rule if depreciation deductions have been claimed, and the property is sold for a gain.
Failure to comply with the recapture rule can result in penalties and interest on the additional tax liability owed. It is important to accurately report recaptured depreciation to avoid these penalties.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 16th April 2024.
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