- 30 -
(DAV) conducted a trade or business of renting its mailing list
and that it was not royalty. From 1974 to 1979, DAV rented
parts of its donor list 451 times. Disabled Am. Veterans v.
Commissioner, 942 F.2d at 311. In doing so, DAV followed the
usual practices of the direct mail industry. Id. DAV prepared
rate cards showing the rates it charged to customers. Id. DAV
employed two staff personnel full time to administer its list
rentals. Id. Petitioner did not use list brokers, employ anyone
to administer its mailing list rental, or otherwise try to rent
its mailing lists like the taxpayer in Disabled Am. Veterans v.
United States, supra.
Respondent points out that the 1987 agreement ran for 3
years, and petitioner regularly received income from the program.
We disagree that this fact shows that PB&T's payments to
petitioner were not royalties because royalties are often paid
regularly over several years. See, e.g., Kramer v. Commissioner,
80 T.C. 768 (1983); Cloward Instrument Corp. v. Commissioner,
T.C. Memo. 1986-345, affd. 842 F.2d 1294 (9th Cir. 1988).
Petitioner had agreements with Wayneco in 1988, 1989, and
1991 for Wayneco to use petitioner's mailing list to sell
affinity items to petitioner's members. Petitioner’s agreements
with Wayneco and PB&T are not remotely like DAV’s list rental
activity.
Respondent contends that the September 1991 letter Chuck
Smith sent to petitioner shows that petitioner actively rented
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011