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disagree. Petitioner's activities were de minimis and were done
to protect petitioner's goodwill with its members.
In Sierra Club, Inc. v. Commissioner, supra, ABS promised
the cardholders that they would receive a rebate of the annual
fee if they participated in the program for a second year. Id.
at 343. ABS breached that agreement. Id. The Sierra Club
helped arrange refunds to members. Id. We found that the Sierra
Club's actions were done to protect its good name. Id.
Similarly, petitioner was acting to preserve its good name with
alumni.
In Oregon State Univ. Alumni Association, Inc. v.
Commissioner, T.C. Memo. 1996-34, we held that the taxpayer
engaged in de minimis activity where it referred occasional
requests for credit card applications or complaints about the
denial of a credit card application, told about 14 alumni to
contact its offices if they needed further assistance, and
requested that USNB send preapproved applications to certain
alumni, expedite about eight applications, and establish some
credit limits above the standard. Here, petitioner has engaged
in less activity than the taxpayer in Oregon State. We hold that
USNB's payments to petitioner were not compensation for services
rendered and that petitioner's activities are compatible with the
treatment of those payments as royalty income.
4. Petitioner's Financial Risks and Rewards
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