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In DAV II, the same exempt organization that appeared before
the Court of Claims in DAV I appeared before this Court; however,
a different taxable year was in issue. Although DAV II involved
the same parties and legal issues as DAV I, we concluded that the
issuance of Rev. Rul. 81-178, supra, had changed the legal
climate. Consequently, we held that collateral estoppel did not
apply. See Disabled Am. Veterans v. Commissioner, supra at 69.
Relying on the definition of royalty contained in Rev. Rul. 81-
178, supra, we concluded that there is no distinction between
active and passive royalties for section 512(b)(2) purposes. See
Disabled Am. Veterans v. Commissioner, supra at 75. We also made
it clear that we could distinguish payments for the use of an
intangible, which constitute a royalty from payments for
advertising, compensation for services, or other profits
masquerading as royalties. See id. at 77. The Court of Appeals
for the Sixth Circuit, reversing the decision of this Court, held
that the issuance of Rev. Rul. 81-178, supra, was not a
sufficient change of legal climate to preclude collateral
estoppel. See Disabled Am. Veterans v. Commissioner, 942 F.2d at
314.
Sierra Club
The issue of whether income from a mailing list transaction
is UBTI arose again in Sierra Club, Inc. v. Commissioner, T.C.
Memo. 1993-199. Unlike the exempt organization in DAV I and DAV
II, the exempt organization in Sierra Club did not itself perform
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