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that arm’s-length and/or independent parties would have paid for
imbalances and transfers for all years as proposed by
respondent’s expert, beginning with 1979. We find that
respondent’s expert’s estimates of the costs are, in part,
supported in the record, and, in part, based on reasonable
assumptions. More importantly, petitioners, who bear the burden
of showing an arm’s-length rate and the amount of any services
performed by or between the controlled entities, have failed to
do so in the context of these cases.28
Concerning the 4-percent markup estimated by respondent’s
expert and advocated by respondent, we hold that rate to be more
28 Petitioners complained at trial and on brief that they
should not be put in the position of rebutting or addressing the
opinions of respondent’s experts and that they should be required
to address only respondent’s determination in the notices of
deficiency. For the most part, respondent’s trial position is,
like petitioners’, based on the record and expertise offered. To
the extent that respondent’s experts have reached different
amounts than respondent’s determinations, the experts’
conclusions would result in reduced deficiencies for petitioners.
Finally, petitioners should not be heard to complain in this
manner when they are, to some degree, responsible for the
differences in respondent’s trial position and the notice
determinations. Petitioners resisted respondent’s pre-notice
requests for information. As previously pointed out in this
opinion, the movement of information from the parties, especially
from petitioners to respondent, was slow and dilatory.
Respondent’s trial position has evolved with the receipt of
information from petitioners, which continued into the middle
portion of a lengthy trial.
Throughout the pretrial involvement of the Court, the
parties were required to define and explain their positions for
purposes of trial in numerous telephone conversations and in
written documents pursuant to orders and otherwise. Accordingly,
there can be no claim of surprise or prejudice by either party on
this point. In this setting, petitioners’ attempt to limit the
arguments and evidence in these cases to the position of an
earlier day less-well-informed adversary must fail.
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