The first of the above questions is purely factual, depends upon the intention of the parties, and is to be determined by an examination of the record as a whole, including the terms of the contract entered into between petitioner and CBS Records, together with any other relevant and material evidence. Beausoleil v. Commissioner, 66 T.C. 244, 247 (1976); Downs v. Commissioner, 49 T.C. 533, 538 (1968); McClain v. Commissioner, 40 T.C. 841, 849 (1963); Chilton v. Commissioner, 40 T.C. 552, 562 (1963); Karl R. Komarek v. Commissioner, T.C. Memo. 1967-112. The second question — whether petitioner had a property interest which he could license or sell — is a question of law.

The first of the above questions is purely factual, depends upon the intention of the parties, and is to be determined by an examination of the record as a whole, including the terms of the contract entered into between petitioner and CBS Records, together with any other relevant and material evidence. Beausoleil v. Commissioner, 66 T.C. 244, 247 (1976); Downs v. Commissioner, 49 T.C. 533, 538 (1968); McClain v. Commissioner, 40 T.C. 841, 849 (1963); Chilton v. Commissioner, 40 T.C. 552, 562 (1963); Karl R. Komarek v. Commissioner, T.C. Memo. 1967-112. The second question - whether petitioner had a property interest which he could license or sell - is a question of law.

Conversely, if the contract does not provide that the fruits of the inventor's labor belong to the employer, and the inventor therefore has transferable property rights in his inventions, then payments in consideration of the transfer of these rights are payments in exchange for property and may qualify as gain from the sale of capital assets. Compare Downs v. Commissioner, 49 T.C. 533, 537-539 (1968), and Blum v. Commissioner, 11 T.C. 101, 108-110 (1948), affd. 183 F.2d 281 (3d Cir. 1950), with Melin v. United States, 201 Ct. Cl. 748, 478 F.2d 1210, 1213-1215 (1973); McClain v. Commissioner, 40 T.C. 841, 849-850 (1963), and Chilton v. Commissioner, 40 T.C. 552, 562-563 (1963). From an examination of all the evidence, we find that the payments CMC received under the value engineering clause of its contract with the Air Force were not compensation for services, but were payments for property.

See sec. 1.1235-1(c), Income Tax Regs.; Thomas H. McClain, 40 T.C. 841, 849 (1963). The utility of analyzing prior decisions is thus restricted to distilling guiding principles which may be applied to the unique factual setting of this case.