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gross profit spread. Therefore, petitioner argues that the
determination is an abuse of discretion.
5. Application of Law to Facts
Petitioner would like us to perform a section 482 analysis;
such an analysis would not be appropriate. Petitioner, after
failing to provide respondent with basic information about its
related party transactions, argues that respondent determined an
incorrect gross profit spread. Petitioner's attack on
respondent's results--that respondent's gross profit spread is
not as accurate as petitioner's--ignores the purpose of the
statute. Section 6038A was enacted to insure that the IRS either
would have timely access to the information necessary to make a
complete analysis of costs between related parties or the right
to make an adjustment based solely on the information that it did
have. Whether the taxpayer can later justify a cost is
irrelevant:
Accordingly, the amounts established by the Secretary
cannot be overturned by a court on the basis that they
diverge from actual costs or other amounts incurred, or
on the basis that they do not clearly reflect income.
The fact that amounts established by the Secretary can
be proven to be clearly erroneous, by reference to
information or materials that were not within the
Secretary's knowledge or possession, would not alone,
in the conferees' view, be sufficient cause for a court
to redetermine allowable amounts of deductions and the
costs of goods sold. * * * [H. Conf. Rept. 101-386, at
594 (1989).]
Petitioner argues that Ms. Hamilton should have accepted Mr.
Borawski's opinion that the 6-percent gross profit spread "was
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