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contends that neither the $50 million nor the $20 million was
arrived at either at arm’s length or on a fair market value
basis.
Respondent, in support of that position, makes the following
points: (1) When the $20 million price was negotiated and
established during 1989 and 1990, DHL and DHLI were owned and
controlled by the same interests within the meaning of section
482. (2) The first price set, $50 million, did not represent an
objective or fair market valuation of the trademark but instead
represented the amount of capital the foreign investors wished to
inject into DHL because of its fragile financial condition. (3)
The foreign investors and DHL shareholders each had tax
considerations, which to some extent were motivating factors for
numerous proposals during the negotiations, the setting of
prices, and the proposed movement of assets in the transaction.
(4) Petitioners’ lawyers orchestrated the price reduction from
$50 million to $20 million for the trademark, by recommending the
removal of favorable provisions, including DHL’s ability to
terminate on 90 days’ notice and by encumbering the trademark
with “two reverse royalty-free 15-year licenses running to the
seller and buyer”. (5) The foreign investors went along with
these approaches so long as their concerns were addressed; i.e.,
among others, that $50 million of capital be infused into DHL.
We are convinced that there was a certain acquiescence on
both sides of this transaction that was motivated by the desire
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