-2-
(FoxVideo). Respondent determined and argues that Vision
licensed the property to FoxVideo and, hence, that payments which
Vision received from FoxVideo as to the transaction are taxable
as ordinary income. Petitioner argues that Vision sold the
property to FoxVideo and, hence, that the payments qualify for
capital gain treatment. Petitioner concedes that the payments
are ordinary income if the property was licensed rather than
sold.
We agree with respondent. Unless otherwise noted, section
references are to the applicable versions of the Internal Revenue
Code, and Rule references are to the Tax Court Rules of Practice
and Procedure.
FINDINGS OF FACT
Some facts were stipulated. The stipulated facts and the
exhibits submitted therewith are incorporated herein by this
reference. We find the stipulated facts accordingly. Vision is
a limited liability company the headquarters of which was in
Royal Oak, Michigan, when its petition was filed with the Court.
For Federal income tax purposes, it is treated as a partnership,
and its members are treated as its partners.
Vision was formed on February 3, 1995, to provide certain
services to users of a base software package (Software) developed
by a corporation named Nordic Information Systems, Inc. (Nordic).
The Software helped track the movement of consumer goods between
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