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has exceeded his discretion is a question of fact. * * * In
reviewing the reasonableness of respondent's determination, the
Court focuses on the reasonableness of the result, not on the
details of the methodology used." Sundstrand Corp. & Subs. v.
Commissioner, supra at 353-354.
In addition to proving that the deficiencies herein are
arbitrary, capricious, or unreasonable, petitioner has the burden
of proving satisfaction of the arm's-length standard. See Eli
Lilly & Co. v. Commissioner, 856 F.2d 855, 860 (7th Cir. 1988),
affg. on this issue, revg. in part and remanding 84 T.C. 996
(1985).
Section 1.482-1(a)(3), Income Tax Regs., provides:
(3) The term "controlled" includes any
kind of control, direct or indirect,
whether legally enforceable, and however
exercisable or exercised. It is the
reality of the control which is decisive,
not its form or the mode of its exercise.
A presumption of control arises if income
or deductions have been arbitrarily
shifted.
The term "controlled taxpayer" means "any one of two or more
organizations, trades, or businesses owned or controlled directly
or indirectly by the same interests." Sec. 1.482-1(a)(4), Income
Tax Regs. The terms "group" and "group of controlled taxpayers"
mean "the organizations, trades, or businesses owned or controlled
by the same interests." Sec. 1.482-1(a)(5), Income Tax Regs.
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