At issue in this case were (the lack of) royalties payments to Hyatt and Hyatt International from foreign subsidiaries.
Hyatt US had not recieved royalties from its foreign Subsidiaries.
The IRS had determined a 1.5 % rate of hotel gross revenues for foreign subsidiaries use of Hyatt trade names and trademarks.
The Tax Court found the 1,5 % rate unreasonable, but did not accept taxpayer’s argument that no royalties were due either. The Tax Court instead found that 0,4 % of hotel gross revenues was an arm’s length charge.H Group Holding, Inc. and Subsidiaries, Formerly HG, Inc. and Subsidiaries, et al. v. Commissioner