- 3 -
agreement), effective as of December 10, 1992. The agreement set
the amount to be paid for past and future use of the patent in
petitioner’s assembly system. Under the agreement, petitioner
has the exclusive and nontransferable license and right to
manufacture and sell the assembly system covered by the patent
from December 10, 1992, until December 31, 2004. Termination of
the agreement may occur upon 10 days’ written notice by either
party or default. The agreement defines the licensee as
petitioner and the licensor as Mr. Tooman. Amounts paid by
petitioner to Mr. Tooman for future use of the patent are
referred to as royalties.
The patent is and has been utilized as a critical component
of petitioner’s assembly systems since 1984. Royalties are equal
to 10 percent of the net sales price of all plastic molded
products manufactured through the use of the patented assembly
system, also known as the “end product(s)”. End products are
considered sold at such time as an invoice covering the end
products is delivered to a customer of the petitioner, or if not
invoiced, at the time that such products are shipped, delivered,
or otherwise made available to the customer. All royalty
payments were paid to Mr. Tooman on a quarterly basis, pursuant
to the agreement.
Petitioner timely filed its U.S. Corporation Income Tax
Return, Form 1120, for taxable year 1995, and utilized the
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011