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Background
All facts were stipulated. The stipulation of facts and the
exhibits submitted therewith are incorporated herein by this
reference. Petitioner is a corporation with a taxable year
ending on June 30. Its business is “social expression” through
the original drawing of licensed cartoon characters and the
dissemination of images of those drawings on certain paper
products. Its principal place of business was in California when
the petition was filed.
Eighty-four percent of petitioner’s stock is owned by Suzy
Spafford; the balance is owned by two individuals unrelated to
her. Ms. Spafford is an artist who graduated from San Diego
State University in 1967 with a bachelor’s degree in fine arts.
She obtained a teaching certificate in 1968 and taught high
school art from 1968 through 1969. She began to develop cartoon
characters in the 1960's, and she gradually developed
petitioner’s business from those characters. She incorporated
petitioner’s business in 1976, and she registered petitioner’s
name as a trademark with the Federal Government.
Petitioner sells paper products (primarily Christmas and
greeting cards, but also secondary items such as stationery,
calendars, recipe books, and invitations), each bearing a copy of
one or more of its cartoon drawings. Petitioner’s artistic work
is all done at its headquarters in San Diego by Ms. Stafford and
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Last modified: May 25, 2011