- 87 -
approach is appropriate where the substance of the entire
transaction so requires.7 See Arrowsmith v. Commissioner, 344
U.S. 6 (1952), and the discussion in Cayuga Service, Inc. v.
Commissioner, T.C. Memo. 1975-4. To permit petitioners to avoid
appropriate section 482 reallocation merely because they changed
the order of the events in a single series of transactions would
unnecessarily exalt form over substance.
IV. Ownership and Value of the DHL Trademark
A. Ownership
Respondent determined that DHL sold the DHL trademark to
DHLI for less than its fair market value. Petitioners argue that
DHL did not own the worldwide rights to the trademark, but that
it did own the rights in the United States. Because of the
obvious effect the ownership question may have on the question of
value, we address the ownership question first.
Ownership and value of the DHL trademark has been one of the
bones of contention between the parties. Respondent’s
determination placed the value of the worldwide rights in the
$500/$600 million range for the 1990-92 transaction. A $20
7 A transactional approach, however, may not be appropriate
where goods or services are independently contracted for after
the requisite control no longer exists. That should be the case
even if the form or substance of the transaction was dictated or
patterned after the approach used when requisite control existed.
In the context of these cases, it would not be appropriate to
approve reallocation of the cost of arm's-length services
performed after the 1992 transaction concluded, unless the
requisite sec. 482 control existed after 1992. Because of our
holdings on the post-1992 issue, we need not address the control
question for that period.
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