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petitioner. The royalty agreement says nothing about fees to be
collected by Crocus. After December 31, 1994, trade show
exhibitors located outside the former Soviet Union either paid
their exhibition fees by check in U.S. currency payable to
petitioner or by wire transfer in U.S. currency to a bank account
in the name of ECI, while exhibitors located in the former Soviet
Union continued to pay their exhibition fees to Crocus. During
the taxable periods at issue, i.e., January 1, 1995 through July
31, 1996, 90 percent of the fees for exhibition space at foreign
trade shows were paid by exhibitors located outside the former
Soviet Union, and the remaining 10 percent were paid by
exhibitors located in the former Soviet Union.7
Second, under Article 4.1 of the royalty agreement, ECI
agrees to pay petitioner a royalty of 25 percent of gross
revenues of foreign trade shows, while under Article 4.2 of the
royalty agreement, petitioner agrees to pay ECI a royalty of 35
percent of gross revenues from trade shows in the United States
conducted after March 1, 1995. Petitioner reported 25 percent of
gross revenues from foreign trade shows in accordance with
Article 4.1., except in cases where the foreign trade show was
conducted solely by petitioner. Petitioner reported 100 percent
of gross revenues from trade shows in the United States conducted
7The parties have not stipulated the relevant percentages
for foreign trade shows conducted before Jan. 1, 1995.
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