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income is a royalty is decided based on the facts and
circumstances. Sec. 1.512(b)-1, Income Tax Regs.
Respondent contends that USNB's payments are not royalties
because: (1) USNB did not pay petitioner to use a valuable
intangible property right; (2) petitioner did not use its own
mailing list; (3) the payments to petitioner were for services
rendered by petitioner; and (4) the enactment of section 513(h)
precludes royalty treatment.
1. Whether USNB Paid Petitioner To Use a Valuable
Intangible Property Right
Respondent contends that USNB did not pay petitioner to use
valuable intangible property rights because USNB did not display
petitioner's logo on the cards. We disagree.
The classic Visa card bore a photograph of an easily
recognizable building on the University of Oregon's campus and
the words "UNIVERSITY OF OREGON ALUMNI ASSOCIATION". The premier
card also had those words but had no photograph. USNB's failure
to depict the building on the premier card does not show that
petitioner failed to exchange a valuable intangible right.
In the Agreement, petitioner gave USNB access to valuable
intangible property rights. The Agreement gave USNB permission
to use the University of Oregon seal with petitioner's logo.
Petitioner's logo is a registered trademark. Petitioner
maintained all rights to the logo which it did not specifically
give to USNB. USNB could not use petitioner's name or logo after
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