Posted by Jimmy on May 12, 2005 at 09:19:25:
if you enter into a contract, and then assign that contract to another for a fee, you have ordinary income. and not capital gain. I do not believe the contractual rights you assigned amounted to a capital asset. In fact, it wold most likely amount to income from a trade or busienss, and would be taxed at ordinary income rates, PLUS self-employment tax rates. an entity might help you avoid the latter.
caveat: I have not researched the nature of contractual rights such as the ones you describe, so I am willing to be wrong about the capital asset question. however…
even if the contractual rights you assigned were capital assets, if you held those rights for less than one year before assigning them, you have short term capital gains, whihc are taxed at ordinary income rates. but they would not be subject to SE taxes.