Short answer: Generally it's taxable income; the open question is what kind. Gross income includes royalties, and whether a data license payment is treated as a royalty, a sale of property or a payment for services depends on the deal's terms. We don't know of IRS guidance specific to AI data licenses, so ask your CPA before signing.
What the code says
'Gross income means all income from whatever source derived', including royalties (26 U.S.C. § 61(a)). For tax-exempt organizations, royalties are generally excluded from unrelated business taxable income (26 U.S.C. § 512(b)(2)); see our nonprofit guide.
Questions for your CPA
- Is this a license (royalty-like) or a sale, and does exclusivity change that?
- Does our team's export and review work make part of it a services payment?
- Which entity receives it, and in what year is it income?
- For a closed or acquired company, who is entitled to the proceeds?
- State tax treatment.
Payment timing
Mode's FAQ says the company invoices once data is accepted and is paid within 30 days (Mode affiliate FAQ).
This is general information, not tax advice.
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Frequently asked questions
Is it capital gain?
Possibly not; it depends on characterization. Ask your CPA.
Do referral fees reduce what we receive?
Mode says referral fees are paid on top and nothing is deducted from the company's offer.
Sources
- 26 U.S.C. § 61, Gross income defined (Cornell LII)law.cornell.edu
- 26 U.S.C. § 512, Unrelated business taxable income (Cornell LII)law.cornell.edu
- Mode affiliate FAQ (PDF, dated Oct 14, 2026)bizbuydata.com
Referral-fee disclosure: we may be paid by a program if your company signs with it after using this site. General information only, not legal advice.
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