Mississippi State University Alumni, Inc. - Page 2

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          ending June 30, 1989, $20,059 for the tax year ending June 30,              
          1990, and $26,143 for the tax year ending June 30, 1991.                    
               The issue for decision is whether petitioner's income from             
          an affinity credit card program is a royalty excluded by section            
          512(b)(2) from the tax on unrelated business taxable income.  We            
          hold that it is.                                                            
               Section references are to the Internal Revenue Code in                 
          effect for the years in issue.  Rule references are to the Tax              
          Court Rules of Practice and Procedure.                                      
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          A.   Petitioner and Mississippi State University                            
               1.   Petitioner                                                        
               The State of Mississippi operates Mississippi State                    
          University (MSU) in the town of Mississippi State, Mississippi.             
               Petitioner's principal office was in Mississippi State,                
          Mississippi, when it filed the petition in this case.  Petitioner           
          is MSU's alumni organization.                                               
               Petitioner informs alumni about MSU, solicits gifts from               
          alumni and supporters, and organizes alumni chapters.  Petitioner           
          uses direct mail and telemarketing to raise funds for MSU.                  
          Petitioner requests contributions from MSU alumni and sends them            
          Mississippi State Alumnus magazine (Alumnus) and information                
          about homecoming, class reunions, and chapter events.  Petitioner           
          has about 100 chapters.                                                     




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