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per se, govern the question of whether the income of the
corporations was being earned at arm’s length.
In a similar vein, the Commissioner has not met with success
when using section 482 to allocate income to a taxpayer who could
not legally receive said income. Commissioner v. First Sec.
Bank, N.A., 405 U.S. 394, 403 (1972); Procter & Gamble Co. v.
Commissioner, 95 T.C. 323, 339 (1990), affd. 961 F.2d 1255 (6th
Cir. 1992). Here, DHL was divided into domestic (DHL) and
foreign (DHLI) operating entities to comply with CAB
requirements. Ultimately, that division resulted in better
income performance for the foreign entity (DHLI). The purpose of
the division was not to shift profits artificially.
Although we found it appropriate to look to the manner in
which the shareholders divided the proceeds from the 1990 to 1992
transaction for purposes of deciding whether there was section
482 common control, it is not appropriate to use that as a
premise for respondent’s tortured syllogism.
As a factual matter, we are unable to find that there was
artificial shifting of net incomes of controlled taxpayers with
respect to DHL’s and DHLI/MNV’s profits. Petitioners have shown
that, for the most part, DHLI’s success was attributable to its
own actions and operations and not to DHL’s efforts.
Accordingly, respondent is without authority to attempt to place
them on a parity with uncontrolled, unrelated taxpayers.
Hospital Corp. of Am. v. Commissioner, 81 T.C. 520, 594 (1983),
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