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affg. T.C. Memo. 1969-39. We thus conclude that petitioner has
failed to prove any substantial uncertainty as to collection.
F. Conclusion
The income petitioner reported on its Federal income tax
returns for fiscal years 1991 and 1992 did not clearly reflect its
income. Petitioner was not justified in shifting income between
itself and its related entities. By granting the rebates,
petitioner essentially sold merchandise at non-arm's-length prices
to its related entities, and arbitrarily shifted income between
itself and its related entities.3 Petitioner has failed to prove
that: (1) Respondent's determination was arbitrary, capricious or
unreasonable; and (2) petitioner sold goods at arm's-length prices
to its related entities. Accordingly, respondent properly
reallocated income between petitioner and its related entities
under section 482, and we hold for respondent on this issue.
Issue 2. Section 6662(b)(2) Accuracy-Related Penalties
The second issue is whether petitioner is liable for the
section 6662(b)(2) accuracy-related penalties for fiscal years
ended March 31, 1991 and 1992. Respondent contends that petitioner
is liable for the penalties in connection with both petitioner's
3 Petitioner claims that it was forced to shift income
among its related entities because it was a victim of competitive
forces over which it had no control. We are unpersuaded by
petitioner's argument. Petitioner chose to operate its business
under the existing market conditions. Petitioner cannot ignore
the reality of the businesses it selected. It was bound by the
structure it chose.
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