- 6 -
Petitioner maintained a membership list and made it
available to BWW in connection with the distribution of TAT.
Under the Agreement, BWW was identified as an independent
contractor, not as an employee of petitioner. If petitioner
believed that either BWW or its employees “damaged, infringed,
tarnished, or otherwise degraded” petitioner's name, petitioner
could, at its discretion, terminate the Agreement and its
relationship with BWW.
BWW was required to and did publish at least 2,250 copies of
each edition of TAT. For the 4 years in issue, in connection
with the publication of TAT, petitioner received from BWW a total
of $876,697, consisting of the 4 annual $25,200 payments due from
BWW and petitioner's share of the advertising proceeds relating
to TAT.
For 1993 through 1996, petitioner timely filed Form 990,
Return of Organization Exempt From Income Tax. Petitioner
treated the above $876,697 as royalty income and excluded it from
its unrelated business taxable income. For 1993, 1994, and 1996,
petitioner did not file Form 990-T, Exempt Organization Business
Income Tax Return.
Discussion
Section 511(a) provides for the imposition of tax on a tax-
exempt organization's unrelated business income. Section
512(b)(2), however, provides that “royalties” received from an
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011