Harold is a mechanical engineer and, while unemployed, invents a switching device for computer networks. He patents the device, but does not reduce it to practice. Harold has a zero tax basis for the patent. In consideration of $$300,000$ plus a $$1$ royalty per device sold, Harold assigns the patent to a computer manufacturing company. Harold assigned all substantial rights in the patent. Which of the following is correct?

Harold automatically has long$-$term capital gain from the lump sum payment, but not from the royalty payments.

Harold automatically has long$-$term capital gain from the royalty payments, but not from the lump sum payment.

Harold automatically has long$-$term capital gain from both the lump sum payment and the royalty payments.

Harold does not have autgrnatic long$-$term capital gain from either the lump sum payment or the royalty payments.

None of the above.