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Wire and check fees LTD’s revenues= 26,360
Client incorporation and
trust creation fees LTD’s revenues= 404,286
TVA administration fees LTD’s revenues= 60,000
Gold and silver fees LTD’s revenues= 60,112
Letters of credit fees LTD’s revenues= 53,047
Total 1,941,375
As LTD paid service fees to INC during the years in issue, the
amount of income to be allocated to INC is the difference between
(1) the arm's-length charges calculated supra and (2) the amounts
of service fees already paid. Accordingly, we hold that income
is to be allocated to INC from LTD pursuant to section 482 for
INC's taxable years ended June 30, 1985 through 1989.
Once a primary adjustment is made to INC's income, the
district director is required to make a correlative adjustment to
the income of LTD pursuant to section 1.482-1(d)(2), Income Tax
Regs. The parties have briefed the issue of whether LTD is
entitled to such correlative adjustment.34
The primary adjustment to INC’s income is not considered to
have been made until the occurrence of the first of any of the
five events set forth in section 1.482-1(d)(2), Income Tax Regs.
The event relevant to the instant case is a final determination
34
As we have stated supra note 3, LTD’s deficiencies in income
tax for its taxable years ended June 30, 1985 and 1986, are not
at issue in the instant case. Accordingly, we decide whether LTD
is entitled to a correlative adjustment for each of its taxable
years ended June 30, 1987, 1988, and 1989.
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