- 203 -
deciding whether the Commissioner's determination is reasonable,
courts focus on the reasonableness of the result, not on the
details of the methodology used. Bausch & Lomb, Inc. v.
Commissioner, supra at 582; see also Eli Lilly & Co. v. United
States, 178 Ct. Cl. 666, 676, 372 F.2d 990, 997 (1967).
Once the taxpayer has proved that the deficiencies set forth
in the notice of deficiency are arbitrary, capricious, or
unreasonable, the taxpayer has the additional burden of proving
satisfaction of the arm's length standard. See Eli Lilly & Co.
v. Commissioner, 856 F.2d at 860; Sundstrand Corp. v.
Commissioner, supra at 354.
In the instant case, as between LTD and INC, respondent's
allocations at least must be reasonable attempts to reflect arm's
length transactions. See Achiro v. Commissioner, 77 T.C. 881,
900 (1981).
b. The Section 482 Regulations
The term "controlled" is defined as including "any kind of
control, direct or indirect, whether legally enforceable, and
however exercisable or exercised." Sec. 1.482-1(a)(3), Income
Tax Regs. The term "controlled taxpayer" means "any one of two
or more organizations, trades, or businesses owned or controlled
directly or indirectly by the same interests." Sec. 1.482-
1(a)(4), Income Tax Regs. The terms "group" and "group of
controlled taxpayers" mean "the organizations, trades, or
businesses owned or controlled by the same interests." Sec.
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