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printed on petitioner's letterhead. Petitioner did not write or
pay for the letters. Grafton spent only 3 to 5 minutes reviewing
each endorsement letter, and he did not change the letters. An
organization's review of marketing materials which bear its name
is reasonably related to protecting the organization's name and
does not disqualify payments from being royalties. Alumni
Association of the Univ. of Or., Inc. v. Commissioner, supra;
Oregon State Univ. Alumni Association, Inc. v. Commissioner,
supra; Sierra Club, Inc. v. Commissioner, T.C. Memo. 1993-199.
The Commissioner has ruled that endorsement of products through
the use of likenesses and signatures of professional athletes
does not prevent payments from being royalties. Rev. Rul. 81-
178, 1981-2 C.B. 135. That ruling discusses two situations. The
first situation is substantially like this case, in which the
income from the endorsement of products, use of signatures and
trademarks, and review of licensed products is a royalty. Id.
The second situation involves much more activity, such as
personal appearances. The Commissioner ruled that income in that
situation is not a royalty. Id.
We conclude that petitioner's review of marketing material
and endorsement of the program were not services to PB&T.
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