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and that Vision would be receiving the $3 million and $1.75
million payments in dispute as a “License Fee”. This agreement
also labeled the transaction underlying the payments a “Grant of
License” and referenced the license agreement as an integral part
of the Vision agreement by stating that “The continuing existence
and validity of Vision’s license of the Nordic Software from
Nordic * * * shall be of the essence of the Vision agreement” and
that “The Vision Software License shall have a term coextensive
with the Term of the Vision agreement”.
We conclude that the transaction was a licensing agreement
and, hence, that the disputed payments are taxable as ordinary
income.1 We have considered all arguments made by the parties as
to this conclusion and have found those arguments not discussed
herein to be irrelevant and/or without merit. We have not
considered the alternative arguments which respondent made in the
event that we were to conclude that the subject transaction was
not a licensing agreement. To reflect concessions,
Decision will be entered
under Rule 155.
1 We also believe that the reimbursement provision of the
Vision agreement is more consistent with our finding of a
licensing agreement as opposed to a sale. Whereas petitioner
asserts that the useful life of the subject property was less
than 4 years, we find that the parties to the Vision agreement
believed at the time of that agreement that the property’s useful
life was 5 years or more.
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