-25-
Trucking, Inc. v. United States, 77 F.3d 236 (8th Cir. 1996);
Joseph Radtke, S.C. v. United States, 895 F.2d 1196 (7th Cir.
1990).
We recognize that the record contains a licensing and sale
agreement between petitioner and Ms. Odell which provides for
petitioner’s payment of royalties to Ms. Odell for its use of
certain intangible property rights. We also understand that a
royalty may be paid for the use of valuable intangible property
rights. Or. State Univ. Alumni Association v. Commissioner,
193 F.3d 1098 (9th Cir. 1999), affg. T.C. Memo. 1996-34 and
Alumni Association of Univ. of Or. Inc., v. Commissioner, T.C.
Memo. 1996-63. We do not believe, however, that petitioner’s
payments of any of the disputed amounts to Ms. Odell were
royalties under the facts herein. Whereas Ms. Odell had used the
referenced intangible property in her sole proprietorship to earn
self-employment income subject to self-employment tax, we do not
believe that she can avoid the payment of Federal employment
taxes simply by declaring that she will be paying royalties to
herself through a controlled corporation for its use of that
property.
We sustain respondent’s determination that petitioner paid
all of the disputed amounts to Ms. Odell as wages.
4. Section 530 Relief
Petitioner argues that it is entitled to relief under
section 530 of the Revenue Act of 1978. When applicable, section
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