26 USC § 1249 - Gain from certain sales or exchanges of patents, etc., to foreign corporations

---
identifier: "/us/usc/t26/s1249"
source: "usc"
legal_status: "official_prima_facie"
title: "26 USC § 1249 - Gain from certain sales or exchanges of patents, etc., to foreign corporations"
title_number: 26
title_name: "INTERNAL REVENUE CODE"
section_number: "1249"
section_name: "Gain from certain sales or exchanges of patents, etc., to foreign corporations"
chapter_number: 1
chapter_name: "NORMAL TAXES AND SURTAXES"
subchapter_number: "P"
subchapter_name: "Capital Gains and Losses"
part_number: "IV"
part_name: "SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES"
positive_law: false
currency: "119-84"
last_updated: "2026-04-17"
format_version: "1.1.0"
generator: "[email protected]"
source_credit: "(Added Pub. L. 87–834, § 16(a), Oct. 16, 1962, 76 Stat. 1045; amended Pub. L. 89–809, title I, § 104(m)(3), Nov. 13, 1966, 80 Stat. 1563; Pub. L. 94–455, title XIX, § 1901(b)(3)(K), Oct. 4, 1976, 90 Stat. 1793; Pub. L. 113–295, div. A, title II, § 221(a)(84), Dec. 19, 2014, 128 Stat. 4049.)"
---


# § 1249. Gain from certain sales or exchanges of patents, etc., to foreign corporations

**(a)** **General rule** Gain from the sale or exchange of a patent, an invention, model, or design (whether or not patented), a copyright, a secret formula or process, or any other similar property right to any foreign corporation by any United States person (as defined in section 7701(a)(30)) which controls such foreign corporation shall, if such gain would (but for the provisions of this subsection) be gain from the sale or exchange of a capital asset or of property described in section 1231, be considered as ordinary income.

**(b)** **Control** For purposes of subsection (a), control means, with respect to any foreign corporation, the ownership, directly or indirectly, of stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote. For purposes of this subsection, the rules for determining ownership of stock prescribed by section 958 shall apply.

---

**Source Credit**: (Added Pub. L. 87–834, § 16(a), Oct. 16, 1962, 76 Stat. 1045; amended Pub. L. 89–809, title I, § 104(m)(3), Nov. 13, 1966, 80 Stat. 1563; Pub. L. 94–455, title XIX, § 1901(b)(3)(K), Oct. 4, 1976, 90 Stat. 1793; Pub. L. 113–295, div. A, title II, § 221(a)(84), Dec. 19, 2014, 128 Stat. 4049.)

## Editorial Notes

### Amendments

2014—Subsec. (a).  struck out “after ,” before “of a patent”.

1976—Subsec. (a).  substituted “ordinary income” for “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231”.

1966—Subsec. (a).  substituted “Gain” for “Except as provided in subsection (c), gain”.

## Statutory Notes and Related Subsidiaries

### Effective Date of 2014 Amendment

Amendment by  effective , subject to a savings provision, see , set out as a note under .

### Effective Date of 1976 Amendment

Amendment by  effective for taxable years beginning after , see , set out as a note under .

### Effective Date of 1966 Amendment

Amendment by  applicable with respect to taxable years beginning after , see , set out as a note under .

### Effective Date

> “The amendments made by this section [enacting this section] shall apply to taxable years beginning after
> 
> .”

, , , provided that: