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methodology. Petitioners have, therefore, failed to prove that
respondent's method, based as it was on gross sales, did not
satisfy the independent transactions standard and, thus, reflect
arm's-length charges for purposes of this case. See supra sec.
II.D. Further, petitioners did not even address the individual
allocations resulting from respondent's method beyond arguing
that they would be different had Ms. Camper's method weighed the
unusual events more heavily. Finally, since the practice of the
group was to separate real estate ownership from restaurant
operation, the unusual events in question that involved the
destruction or construction of improvements to real property
(see supra, note 3), affected the real estate holding companies.4
Ms. Camper testified that, in allocating management cost share
expenses to the real estate holding companies, she took into
account not only those members' gross sales (which were very low)
but also some measure of the time spent with respect to those
members. Undoubtedly, management time was necessary to deal with
the destruction and construction caused by the unusual events
and, to that extent, Ms. Camper did take account of the unusual
events. Petitioners have not persuaded us that it was arbitrary,
capricious, or unreasonable for Ms. Camper to deal with the real
estate holding companies as she did, nor have petitioners
4 For instance, it was Harding Highway Realty, Inc. and not
Kenco, that incurred the loss from the fire, filed the claim,
received the proceeds from the insurance company, sold the
property and received the proceeds therefrom, and incurred the
costs of building the new facility.
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