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The U.S. Court of Appeals said that "More comprehensive
involvement would be difficult to imagine." Id. Unlike the
organizations in Texas Farm Bureau v. United States, supra,
Fraternal Order of Police v. Commissioner, supra, and Louisiana
Credit Union League v. United States, supra, petitioner did not
perform business services. Petitioner's activities relating to
the affinity credit card program were minimal. PB&T paid
petitioner to use intangible property, not to obtain business
services. As the U.S. Court of Appeals for the Ninth Circuit
said:
To hold otherwise would require us to hold that any
activity on the part of the owner of intangible
property to obtain a royalty, renders the payment for
the use of that right UBTI and not a royalty. [Sierra
Club, Inc. v. Commissioner, 86 F.3d at 1536.]
We conclude that PB&T's payments to petitioner under the
affinity credit card contracts were for the use of valuable
intangible property rights, not for services.
D. Petitioner's Use of Its Mailing List
Respondent contends that, like the taxpayer in Disabled Am.
Veterans v. Commissioner, 942 F.2d 309 (6th Cir. 1991), and
Disabled Am. Veterans v. United States, 227 Ct. Cl. 474, 650 F.2d
1178 (1981), petitioner regularly rented its mailing list.
Respondent argues that, under those cases, income from
petitioner's mailing lists is not a royalty. We disagree.
In Disabled Am. Veterans v. United States, 650 F.2d at 1184,
the Court of Claims held that the Disabled American Veterans
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