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perform services, particularly including the service of
endorsing and promoting the credit card program.
As has been well established, in many respects, the SC-ABS
agreement is ambiguous. Nevertheless, considering both the SC-
ABS agreement and the circumstances preceding and following its
execution, we conclude that petitioner's obligation to
cooperate was not an agreement to endorse or promote the credit
card program beyond the endorsement that necessarily results
from petitioner’s license of its logo, name, and the other
intangibles here in question.
The use of petitioner's name, marks, logo, and its
continued endorsement was precisely the valuable consideration
petitioner provided pursuant to the SC-ABS agreement, and it
was precisely for what ABS was paying. Petitioner may have
approved solicitations and communications to the members with
respect to the credit card program, but it was ABS that
designed and paid for those communications, which actions were,
primarily, for its own benefit, pursuant to its duties under
the SC-ABS agreement. Respondent has stated in a revenue
ruling that income from the endorsement of products, use of
signatures and trademarks, and review of licensed products is a
royalty within the meaning of section 512(b)(2). Rev. Rul. 81-
178, 1981-2 C.B. 135 (distinguishing circumstance where
personal services, in the form of appearances and interviews,
are required). Accord Mississippi State Univ. Alumni, Inc. v.
Commissioner, T.C. Memo. 1997-397.
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