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taxpayer engaged in selling the services of its foreign parent to
assemble integrated circuits, did not maintain inventory, and had
no warehousing expenses. The taxpayer (a U.S. subsidiary)
received commissions ranging from 11 to 15 percent from its
foreign parent.
b. IRS Economist.
Ms. Hamilton received advice from an IRS economist, Ron
McGinley. Ms. Hamilton described to Mr. McGinley petitioner's
business and its relationship to its foreign parent. He told her
that he had experience in determining an appropriate commission
rate for services and that he was currently examining a company
that provided services similar to those provided by petitioner.
Mr. McGinley also told Ms. Hamilton that petitioner should be
compensated for each additional function performed on behalf of
its foreign parent. Based on his experience, Mr. McGinley told
Ms. Hamilton that a 10 to 15-percent commission range would be
appropriate.
c. MANA Survey.
Mr. McGinley also gave Ms. Hamilton research bulletin
surveys prepared by MANA (the MANA survey). The MANA surveys
provided data concerning the sales commissions charged by
manufacturing agents to their principals. In brief, the MANA
survey indicated that a commission rate should enable the agent
to make a profit and that additional services warrant additional
fees. In the product category of Electrical/Technical Products,
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