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Secondly, I want to release the new source code as MIT license, is that allowed?
The first is (I think).
However if you want to share any GPL-ed Code it must be released as GPL. GPL is viral like that.
Personally, I've always stuck to using LGPL, MIT, or BSD licensed code in closed source products.
How is that different? If you're making something for internal use at your company, it means that you don't have to give back. If you are distributing it to users that are not yourself (or your company), you must make it GPL.
2. You cannot relicense code under different licenses unless the license explicitly says that you can. The GPL doesn't have such a provision.
Secondly, I want to release the new source code as MIT license, is that allowed?
Your work is a derivative work of the original copyrighted source code.
The GPL only gives permission for you to distribute such a derivative work if it is also GPL'd. Thus, if you're only using your code privately, you should be OK. If you actually distribute your closed-source derivative work to others, then you have reused the original copyrighted source code in a manner not approved by the rightsholder's license. You are then violating someone else's copyright.
This applies whether you distribute your derivative code in a closed-source product, or under a non-GPL open-source license (like the MIT license).
(I am not a lawyer but this is pretty basic GPL interpretation.)
Edit: to clarify private use vs. 'distribution' distinction.
Look at it this way: Photoshop is a proprietary application, but anyone can write a plugin. If someone wrote a Photoshop plugin using GPL'd software and distributed it independently, Adobe would not have to GPL all of Photoshop. They would have to release the source code to the plugin, of course.
That said, if the only reason the piece of software is written as a plugin is to circumvent the GPL, you'll piss off a lot of people. (e.x. the Acquisition LimeWire client for OS X)
If it's a plugin that's distributed separately from the base application I suspect you would only have to release the source to the actual plugin. Look at it this way: Photoshop is a proprietary application, but anyone can write a plugin. If someone wrote a Photoshop plugin using GPL'd software and distributed it independently, Adobe would not have to GPL all of Photoshop. They would have to release the source code t…
My guess is no. But on the flip side I've never heard of a legal case involving open source code outside the SCO lawsuit and that was more like extortion. Personally, I've always stuck to using LGPL, MIT, or BSD licensed code in closed source products.
usually the FSF will send notices to people or companies violating the GPL, a lawsuit is the last option.