Joan Bullato, because of her great
fondness for his music, has purchased the rights to one of the songs written by
John Clapton. She estimates that the royalties from the song will total about
$35,000 per year for the next few years. She has no plans to buy any additional
song rights. Explain whether the royalties she receives would be treated as
business income or property income. In addition, indicate how any gain or loss
on a disposition of the rights would be taxed.
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