Alumni Association of the University of Oregon, Inc. - Page 16

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                    a.   Petitioner's Solicitation of Its Members                     
               Respondent contends that petitioner's solicitation of its              
          members for the credit card program precludes royalty treatment             
          for the resulting income because petitioner mailed some                     
          solicitation materials once during the years in issue (1990 and             
          1991) and twice during prior years.                                         
               We disagree.  Petitioner's activities were de minimis and              
          intended to bolster petitioner's relationship with University of            
          Oregon alumni.  Petitioner agreed to inform its members of the              
          existence of the affinity credit card program at least once per             
          year, but was not required to mail any solicitation materials to            
          alumni.  USNB developed all marketing materials.  Petitioner                
          reviewed those materials, but USNB retained final decision-making           
          authority.  Petitioner might have asked USNB to "tone down" the             
          solicitation materials or to correct the spelling of a name.                
          USNB agreed to prepare and mail promotional materials.                      
          Petitioner's one mailing during the years at issue (1990 and                
          1991) included a letter and brochure designed by USNB.  Ninety-             
          five percent of the cardholders became cardholders due to USNB's            
          marketing efforts.  Petitioner included information about the               
          program in its application materials.  Petitioner apparently was            
          using the credit card program in part to encourage alumni to join           
          the Alumni Association of the University of Oregon.                         
               In Sierra Club, Inc. v. Commissioner, 103 T.C. at 335, a               
          provider of financial services, American Bankcard Services, Inc.            




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