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evidence that services were provided or value was added by
Northwest, while the tax benefits are quite apparent. Northwest
had no employees during the years at issue. Moreover, Dura-Craft
employees placed all of the orders in Dura-Craft office space and
received all of the raw materials directly at the Dura-Craft
plant. Simply, there was no "arm's-length" reason beyond these
tax benefits for Dura-Craft to compensate Northwest.
Based upon the entire record in this case, we conclude that
Dura-Craft is not entitled to include the 5-percent processing
fees paid to Northwest as part of its cost of goods sold for its
taxable years ending October 31, 1988 and 1989. We have
considered all of the other arguments made by petitioners and, to
the extent we have not addressed them, find them to be without
merit.
To reflect the foregoing and concessions by the parties,
Decisions will be entered
under Rule 155.
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