Oregon State University Alumni Ass'n v. Commissioner

This case involves the tax treatment of affinity credit card programs conducted by university alumni organizations.

Facts.

These two cases went to trial in the Tax Court on stipulated facts, which are substantially the same in both cases (the two schools’ alumni associations conducted their affinity credit card programs together). Basically, the alumni associations raised money for their schools by letting a bank offer credit cards using their names. The credit card customers and vendors did business with the bank in the ordinary way, and the bank paid money to the alumni associations. The alumni associations did not do much work for the money, but they did a little. The question is whether they did little enough work for the money they received to be royalties, nontaxable because of their exempt status, or whether they did too much, so that the money was taxable as unrelated business income.

Because the cases were tried, and there are no challenges to the findings of fact, we take our facts from the findings. The bank went into the deal to get access to the alumni associations’ mailing lists and to use the schools’ names, seals, colors and logos on the promotional material and…