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with respect to petitioner’s participation in the credit card
program described in our findings of fact. Petitioner’s receipts
from the credit card program (the receipts) were $6,021 and
$303,225 for 1986 and 1987, respectively. Respondent adjusted
petitioner’s “unrelated business taxable income” by including the
receipts and determining that they did not constitute “royalties”
within the meaning of section 512(b)(2). Among other assignments
of error, petitioner assigns error to respondent’s determinations
of deficiencies based on petitioner’s participation in the credit
card program. Principally, petitioner argues that the receipts
were “royalties” within the meaning of section 512(b)(2).
Alternatively, petitioner argues: (1) Its activity with respect
to the credit card program did not constitute a trade or
business, (2) that activity was substantially related to its
exempt purposes, and (3) that activity was not regularly carried
on.
The parties have raised principally questions of fact with
respect to the receipts. The credit card program was the product
of numerous agreements between various parties (the agreements),
including petitioner, ABS, and Chase Lincoln. We shall look to
the agreements, along with the relevant facts and circumstances
surrounding the execution of the agreements, to determine the
nature and character of the receipts. Petitioner bears the
burden of proof. See Rule 142(a).
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