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Lobo Sports Properties, LLC



Lobo Sports Properties, LLC, and Iceberg Ventures, Inc, are subsidiaries of the same company. After conducting audits, the Department assessed both on February 27, 2017, for gross receipts tax, penalty and interest. Both responded with formal protests on May 26, 2017. This protest presented multiple issues, the first of which was whether any portion of the Taxpayer’s receipts were derived from sublicensing intellectual property, which is excluded from the definition of property in statute. The Taxpayer provided various services to the athletic department of University of New Mexico, which included procuring and managing sponsorships for its athletic programs and producing radio broadcasts. An agreement between the Taxpayer and UNM authorized the Taxpayer to allow the sponsorship of UNM athletics to businesses and allow the UNM name and logos to be used by the sponsor. The Taxpayer argued that this agreement amounted to sublicensing the UNM trademarks. Because the licensing of intellectual property rights is not property, the receipts from sublicensing these rights, it argued, should be excluded from gross receipts. A closer examination of the agreement, however, showed that it permitted the sponsor only fair use of the trademarks and did not explicitly allow the sponsor a license for their use. Also, any use of the trademark was still to be approved by the university. Since the agreement did not give the Taxpayer the authority to sublicense the trademarks and the Taxpayer could not support that any of its fees resulted from the licensing of intellectual property, none of its receipts from allowing the sponsorships could be excluded. The next issue was whether the Taxpayer could deduct the receipts from broadcasting time for advertising messages of national or regional sellers. Here the difficulty was that the Taxpayer was unable to provide clear support for the receipts that qualified. The agreements with national companies for advertising provided as support were far too unspecific to document the exact amounts deducted. The Taxpayer bears the burden of establishing the amount of a claimed deduction. Without clear support establishing the amounts, the Hearing Officer concluded, the deduction had to be denied. The third issue to be resolved was the Taxpayer’s deduction for bad debt. If the Taxpayer reports receipts and then does not received payment, it may take the deduction, but here the Taxpayer was unable to clearly identify whether the receipts had been originally reported. Here again, without the proper documentation the deduction was denied. The Taxpayer also claimed that penalty and interest should be abated for the late payment of pass-through-withholding tax, but since it had no proof of the on time mailing of the payment, this request too was denied. This having been decided, the Hearing Officer ordered the protest denied.