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determine a fact in issue. Fed. R. Evid. 702. Under section
6038A(e)(3), we are reviewing whether respondent abused her
discretion in reducing petitioner's cost of goods sold. The
report itself cannot be considered as evidence of the proper
gross profit spread since it was not in respondent's possession
at the time the determination under section 6038A(e)(3) was made.
The only function the report can serve is to help us evaluate the
information that was in respondent's possession at the time the
determination was made. The report failed to perform that
function. The report is not appropriate expert testimony because
it purports to apply a legal standard. See Laureys v.
Commissioner, 92 T.C. 101, 127-129 (1989). As explained above,
the test is not identical to a section 482 test, which is Dr.
Chandler's area of expertise. We are not holding that an expert
report is never appropriate in a section 6038A case, only that to
be considered the report must be helpful in light of the standard
of review called for by the statute. Dr. Chandler's report did
not provide assistance in that respect.
3. Respondent's Section 6038A(e)(3) Determination
Petitioner had no documentation to show how its gross profit
spread was set. Respondent, based her determination of a 15-
percent gross profit spread on three main factors:
a. Experience With a Similar Taxpayer.
Ms. Hamilton was examining a taxpayer with a separate
division that conducted a business similar to petitioner's. That
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