- 17 - 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).Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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