- 9 -
482 allocation is arbitrary, capricious, or unreasonable. Bausch
& Lomb, Inc. v. Commissioner, supra; G.D. Searle & Co. v.
Commissioner, 88 T.C. 252, 359 (1987); see also Altama Delta
Corp. v. Commissioner, 104 T.C. 424, 456-457 (1995); Seagate
Tech. Inc. & Consol. Subs. v. Commissioner, 102 T.C. 149, 163-164
(1994).
Neither the absence of tax avoidance motives, nor the
existence of a business purpose, precludes respondent from
reallocating costs under section 482 in order to reflect clearly
the respective incomes of members of the controlled group.
Central Cuba Sugar Co. v. Commissioner, 198 F.2d 214, 215-216 (2d
Cir. 1952) (dealing with 26 U.S.C. sec. 45 (I.R.C. 1939), the
precursor to section 482), revg. and remanding on this issue,
16 T.C. 882 (1951); Eli Lilly & Co. v. United States, 178 Ct.Cl.
666, 372 F.2d 990, 998-999 (1967); G.D. Searle & Co. v.
Commissioner, supra at 359.
C. Common Control
Petitioners are commonly owned corporations, owned in equal
shares by the owners either individually or with their respective
spouses, and are, thus, "controlled taxpayers" within the meaning
of section 482. See sec. 1.482-1(a)(4), Income Tax Regs.
D. Arm’s-Length Charges
The parties have stipulated, and we have found, that the
primary purpose of BKK is to provide management and
administrative support services to the other 13 members of the
group. BKK provided such services to the purchasing members, and
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