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Oregon State Univ. Alumni Association, Inc. v. Commissioner, T.C.
Memo. 1996-34.
Respondent contends that petitioner's income from the
affinity credit card program during the years in issue arises
from a trade or business which petitioner regularly carried on
and which is substantially unrelated to its tax-exempt purpose,
and that petitioner's affinity credit card income is not a
royalty under section 512(b)(2).4 For reasons discussed below,
we hold that the payments at issue are royalties. In light of
this holding, we need not decide whether petitioner's affinity
credit card program is a trade or business.
B. Whether PB&T Paid Petitioner To Use Valuable Intangible
Property Rights
PB&T obtained the right to use valuable intangible property
rights in the 1987 and 1991 agreements. Under the agreements,
PB&T could use petitioner's name, its letterhead, the signature
of its executive director on promotional materials, a list of
names and addresses of petitioner's members, and MSU's "walking
bulldog" trademark. Payments for the right to use these items
may be royalties. See Sierra Club, Inc. v. Commissioner, supra;
Alumni Association of the Univ. of Or., Inc. v. Commissioner,
4Respondent’s position is consistent with Tech. Adv. Mem.
97-24-006 (June 13, 1997), in which respondent took the position
that income from an affinity credit card arrangement received by
a sec. 501(c)(3) organization is unrelated business taxable
income under sec. 512(a).
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