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employed. Bausch & Lomb, Inc. v. Commissioner, supra at 582; see
also Eli Lilly & Co. v. United States, 178 Ct. Cl. 666, 372 F.2d
990, 997 (1967).
II. Were Respondent’s Determinations in the Notices of
Deficiency Arbitrary, Capricious, or Unreasonable?
As explained above, taxpayers generally bear a heavier than
normal burden of proving that the Commissioner’s section 482
allocations are arbitrary, capricious, or unreasonable.
Petitioners argue that their burden should be lessened once they
can show that the notices of deficiency are arbitrary,
capricious, or unreasonable. Petitioners contend that the
determinations in the notices are significantly different from
the determinations advanced by respondent’s experts at trial.
Because of that and a procedural question, petitioners assert
that their burden in these cases should be to show, by only a
preponderance of the evidence, that the prices with any commonly
controlled entities were consistent with an arm’s-length price,
citing Seagate Tech., Inc. & Consol. Subs. v. Commissioner, supra
at 164. Respondent contends that the actions taken and
determinations made were reasonable under the circumstances.
Initially, petitioners point out that respondent did not
issue or provide petitioners with any notice or report of the
proposed adjustments before issuance of the notices of
deficiency. Petitioners then outline four instances where they
contend that respondent’s notice determinations were either
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