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The sole issue in this case is whether petitioner is
required under section 263A, to capitalize certain royalties paid
as the exclusive licensee of a patented “hot manifold assembly
system”.
This case was submitted fully stipulated pursuant to Rule
122. The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time the petition
was filed, petitioner’s principal place of business was Auburn
Hills, Michigan.
Petitioner is a Michigan corporation licensed by the State
and engaged in the business of manufacturing and engineering of
products and services in the fields of industrial chemicals,
plastics, materials, and synthetics. The sole shareholder and
president of petitioner is Patrick A. Tooman (Mr. Tooman).
Petitioner was incorporated on June 21, 1984. Mr. Tooman
developed a hot manifold assembly system which was patented under
the United States Letters Patent No. 4,964,795 (the patent),
dated October 23, 1990. The patent, as described in the
abstract, is “a manifold assembly system of the type used for
conveying plastic injecting molding material from a central
injection point or sprue to a number of mold cavities or to
multiple points”.
On June 10, 1993, petitioner and Mr. Tooman entered into an
agreement entitled Amended and Restated License Agreement (the
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