- 33 - methodology 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). In addition to proving that the deficiencies set forth in the notice of deficiency are arbitrary, capricious, or unreasonable, the taxpayer has the burden of proving satisfaction of the arm's-length standard. See Sundstrand Corp. v. Commissioner, supra at 354. b. The Regulations in General Section 1.482-2(d), Income Tax Regs., provides a framework for determining an arm's-length consideration for the transfer, sale, assignment or loan of intangible property or an interest therein between members of a group of controlled entities. Section 1.482-2(d)(3)(ii)(a), Income Tax Regs., specifically identifies "patents" as intangible property. Accordingly, we shall apply section 1.482-2(d), Income Tax Regs., in making our inquiry as to an arm's-length consideration for the rights Powertex received under the Tri-Podd license agreement. An arm's-length consideration is defined specifically as "the amount that would have been paid by an unrelated party for the same intangible property under the same circumstances." Sec. 1.482-2(d)(2)(ii), Income Tax Regs. The best indication of such arm's-length consideration generally is transfers by the same transferor to unrelated parties for the same or similar intangible property under the same or similar circumstances. Id. If a sufficiently similar transaction involving an unrelated party isPage: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Next
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