LO$\mathrm{.}2,$LO$\mathrm{.}2,$Distinguish capital assets from ordinary assets.

$33$Explain the relevance of a sale or exchange to classification as a capital gain or loss, and apply the special rules for the

capital gain or loss treatment of the retirement of corporate obligations, options, patents, franchises, and lease cancellation

payments. Hilde purchased all of the rights to a patent on a new garden tool developed by a friend of hers who was an amateur inventor.

The inventor had obtained the patent rights, set up a manufacturing company to produce and sell the garden tool, and produced

substantial quantities of the tool, but he then became discouraged when no large garden company would agree to distribute

the tool for him. Hilde purchased the patent rights $($but not the manufacturing company$)$ for $$120,000$ on October $24,2023.$

Hilde had never engaged in such a transaction before, but she is a salesperson in the garden industry and thought she could

succeed where her friend had failed. On June $27,2024,$ she sold all of the patent rights to Garden Tool Company for $$1,233,000.$

Garden Tool will manufacture the tool in its own factory and sell it to its customers. What is the nature of Hilde$$s gain

from this transaction?