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bargained for, and received, any consideration on account of
that anticipation.
Generally, income realized by an exempt organization from
the sale of advertising in a periodical is taxable UBTI. See
sec. 1.512(a)-1(f)(2), Income Tax Regs. The SC-ABS agreement
was not a contract for advertising, and, notwithstanding that
petitioner entered into contracts for advertising at the same
time it was obligated under the SC-ABS agreement, nothing in
sections 511 through 513 or the opinion of the Ninth Circuit in
Sierra Club (1996) indicates to us that the contemporaneous
existence of obligations under the two contracts necessarily
means that some or all of the receipts, received pursuant to
the SC-ABS agreement, cannot properly be characterized as
“royalties” under section 512(b)(2).
None of the receipts were received on account of
petitioner's providing advertising to ABS.
5. Nonprofit Mail Permit
In soliciting the members with respect to the credit card
program, ABS, on at least one occasion, used petitioner’s
nonprofit mail permit. ABS paid the postage.
During the years 1986 through 1992, petitioner held a
nonprofit mail permit (the mail permit) and regularly used the
mail permit to send communications to its members, supporters,
and other interested persons at the nonprofit rate. Under
U.S. Postal Regulations, cooperative mailings may be made at
the special bulk rates available to nonprofit organizations
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