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Yes, Virginia, patent royalties are taxable

By Lawrence B. Ebert, Esq.

In an article archived on the Sutherland law firm web site, one finds:

"AIDS Researchers to Share Award for Biotech Work"

Two Emory University AIDS researchers will share this year's Biomedical Industry Growth Award, the local biotech community's most prestigious honor. Dennis Liotta and Raymond Schinazi, the scientists behind one of the key anti-HIV compounds used in AIDS-fighting drugs, will receive the award at a January 15 ceremony.

"Dr. Liotta and Dr. Schinazi have been instruments of growth in our industry through leadership as researchers and entrepreneurs," said Philip Moise, secretary and coporate counsel for the Georgia Biomedical Partnership, which gives the annual award, and chairman of the partnership's awards committee.

The Forbes website has a 2003 entry:

Raymond F. Schinazi, prominent AIDS researcher and professor at Atlanta's Emory University, had "fraudulent intent" in leaving $158,000 in patent royalties off his 1993 tax return, a judge says. The Egyptian-born scientist testified he thought the money was tax free. But in affirming $64,000 of civil fraud penalties and interest, U.S. District Judge Orinda Evans ruled Schinazi made "deliberate misrepresentations" to auditors and, though this refund case dealt with only 1993, originally didn't pay tax on $426,000 of such income from 1991 to 1994. No comment from Schinazi or his lawyer.

HighBeam noted in 2006:

Emtriva is the drug invented at Emory. It was discovered by Emory researchers Dennis C. Liotta, Raymond F. Schinazi and Woo-Baeg Choi and licensed to Triangle Pharmaceuticals by Emory University in 1996.

Footnote 42 of a 2006 BC Law Review article states:

For example, Emory University researcher Dr. Ray Schinazi, co-inventor of the
blockbuster drug Emtriva, claims to have gotten the idea for the new compound from
hearing a presentation by Canadian researcher Bernard Belleau at an AIDS research con-
ference in Montreal.

The antecedent text for footnote 42 was:

Prompt dissemination of research hypotheses, results, and meth-
odologies through scientiȘc presentations and publication has pro-
vided the foundation for advances and discoveries in numerous sci-
entiȘc Șelds that have beneȘted humanity.42

Full post as published by IPBiz on July 05, 2008 (boomark / email).