- 68 -
With respect to the three individuals who prepared the BVS
report, in making the analyses reflected therein, they assumed
that the prices that B&L Ireland and B&L Hong Kong paid to B&L
Inc. and that B&L Ireland paid to B&L GmbH for sunglass parts
were not arm's length and that those prices should be estimated
based upon the fair rates of return for the assets used in the
sunglass assembly operations conducted by each of those
companies. However, reports prepared by respondent's economist
and her examining agent for purposes of determining whether
transfer pricing adjustments should be made for petitioners'
taxable years ended December 29, 1985, through December 27, 1987,
state that the transfer prices paid by B&L Ireland and by B&L
Hong Kong for sunglass parts, which were the same transfer prices
that the parties agreed to use for petitioners' taxable years
ended December 25, 1983, and December 30, 1984, were appropriate
and that no transfer pricing adjustments were necessary.36
The parties have not persuaded us of the reliability and
accuracy of the respective opinions of Mr. Holdren and the three
individuals who prepared the BVS report for purposes of applying
35(...continued)
an error in the analyses contained in his opening report.
36 We also note that the individuals who prepared the BVS report
admitted that the data that they used in making their analyses
were incomplete and inconsistent, especially with respect to B&L
Ireland.
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