actual value of the subject master equaled between $3,000 and
$5,000.
Included in Encore’s prospectus package is a list of
distributors with respect to the distribution of sound recordings
made from the subject master recording. Petitioner entered into
a standard distribution-employment agreement with Arrival Records
and did not modify any of the terms of the agreement before
signing. Petitioner’s distribution agreement with Arrival was
subsequently assigned to Marock Records.
During the term of the lease between petitioner and Encore,
total income derived from sales of albums and cassettes made from
the Kingcannon master totaled $570.85. Petitioner’s share of the
income from sales of albums and cassettes made from the subject
master totaled $18.57. The primary purchaser of the sound
recordings made from the master was the artists, the Kingcannon
family. During the term of the lease, petitioner did not
personally distribute sound recordings made from the subject
master.
During 1984, petitioner worked as an agent for Encore
selling its tax shelters at a commission rate of 20 percent of
receipts from the sales of leases. During the latter part of
1984, petitioner issued three newsletters directed to his master
recording lease clients. Each newsletter was entitled DERWYN J.
BOOKER, TAX ADVANTAGED INVESTMENT COUNSELING.
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