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supporting services--to determine whether the 25-percent test
applies. Sec. 1.482-2(b)(7)(v), Example (8), Income Tax Regs.
We find that the services that INC rendered were in the nature of
supporting services for purposes of section 1.482-2(b)(7)(ii),
Income Tax Regs.
The factor of whether the services that INC rendered to LTD
were independent of the other activities of INC is not applicable
to the instant case. INC performed very few, if any, "other"
activities that were not for LTD. Consequently, the services
that INC rendered to LTD cannot be viewed as "independent" of the
"other activities" of INC because INC had few "other activities".
Accordingly, we believe that the factor of "independent" services
is not relevant to the instant cases.
Based on the foregoing, we conclude that, pursuant to the
facts and circumstances test, INC renders services to a related
party as one of its principal activities within the meaning of
section 1.482-2(b)(7)(ii)(a), Income Tax Regs. Consequently, we
hold that the services are an integral part of the business
activity of INC within the meaning of section 1.482-2(b)(7),
Income Tax Regs. Because services are an integral part of INC's
business activity, an arm’s-length charge for INC's services
rendered to LTD is "the amount which was charged or would have
been charged for the same or similar services in independent
transactions with or between unrelated parties under similar
circumstances considering all relevant facts." Sec. 1.482-
2(b)(3), Income Tax Regs.
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