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reorder the steps of the trademark transfer portion of the
transaction and conclude that it occurred before the foreign
investors actually gained control of DHLI/MNV or its successor.
Respondent counters that the requisite control should be
measured or considered when the controlling persons or entities
are dealing with each other. Under respondent’s approach, all
that is necessary is that the control exist when the parties
irrevocably bind themselves to a transaction. Under this
approach, accordingly, even though the parties’ execution of the
agreement terms may occur when control no longer exists,
respondent would have section 482 authority to reallocate.
Respondent relies on Rooney v. United States, 305 F.2d 681, 683
(9th Cir. 1962), a case in which expenses incurred by a
liquidated corporation were allocated to a successor corporation
that had profited from transferred assets on which the expenses
were incurred.
We agree with respondent and hold that it is appropriate to
use a transactional approach to a specific transaction that was
formulated at a time of requisite control and executed after the
requisite control no longer existed. That is especially so here,
where the options for the foreign shareholders to gain control
and the transfer of the trademark rights to the new foreign
shareholder corporation were part of the same transactions, the
terms of which were preconceived, concurrent, and interdependent
and occurred within 1 month of each other. A transactional
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