Assume instead that DC will contract with NRA for a license of NRA's existing patent to produce, market, and distribute the drug worldwide (including with the United States) for a five year period, under an arrangement whereby DC would pay NRA a lump sum of $100,000 plus 10 percent of all revenue derived by DC with respect to this patent. Assume the parties expect that in reality, the market and technological base for Tax Relief is not likely to last beyond three years so that when the patent reverts to NRA, it will be obsolete and worthless. Which are the following statements best describes the type of income generated under these facts?
O NRA realizes only royalty income.
O NRA realizes gain from the sale of an intangible so all of this income is characterized as gain from the sale of an intangible and none is characterized as a royalty under 865(a).
O NRA realizes gain from the sale of an intangible so part of this income is characterized as gain from the sale of an intangible, and the rest is characterized as a royalty under section 865(d).
O It does not matter what the character of the income is.
O Under the Internal Revenue Code, only the Bahamas can tax the income and the Bahamas does not levy an income tax.
O This question is irrelevant since none of the income is US sourced.