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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
After settlement of some issues, the issue for decision
involves whether payments petitioner received in connection with
advertising in a law-enforcement trade publication should be
treated under section 512(b)(2) as royalty payments and excluded
from petitioner's unrelated business taxable income.
Background
This case was submitted fully stipulated under Rule 122, and
the facts are not in dispute.
Petitioner constitutes a not-for-profit corporation,
organized under the laws of Arkansas and recognized under section
501(c)(5) as generally exempt from Federal income tax.
Petitioner was formed for the purpose of, among other
things, promoting impartial enforcement of law and order,
increasing efficiency in the police profession, and cultivating a
spirit of fraternity and mutual helpfulness among and between the
Arkansas law enforcement community and the people of Arkansas.
During the years 1993 through 1996, under an agreement
entitled “Royalties and Licensing Agreement” (the Agreement)
between petitioner and Brent-Wyatt West (BWW), an Arizona
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Last modified: May 25, 2011