BTR Dunlop Holdings, Inc. - Page 13




                                       - 13 -                                         

          respondent relies on section 482, which gives respondent broad              
          discretion to allocate gross income, deductions, credits, or                
          allowances between two related corporations if the allocations              
          are necessary either to prevent evasion of taxes or to reflect              
          clearly the income.  See Seagate Tech., Inc. & Consol. Subs. v.             
          Commissioner, 102 T.C. 149, 163 (1994).  The applicable standard            
          for making these allocations with respect to fair market value is           
          arm’s-length dealing between taxpayers unrelated by ownership or            
          control.  See sec. 1.482-1A(b)(1), Income Tax Regs.  Accordingly,           
          we are called upon to decide the fair market value of Schlegel UK           
          and Schlegel GmbH on their respective valuation dates.                      
               Respondent argues that, for purposes of section 311(b) and             
          section 482, the value of Schlegel UK on July 1, 1989, was                  
          $49.8 million, that the value of Schlegel GmbH on November 30,              
          1989, was $8.4 million, exclusive of the silent partnership                 
          interest, and that petitioner’s adjusted tax basis in Schlegel              
          GmbH was $4,074,993 on the valuation date.  Respondent also                 
          argues that this determination is not arbitrary, capricious, or             
          unreasonable pursuant to section 482.                                       
               Petitioner argues that, based upon the fair market value of            
          the net assets of Schlegel UK, including goodwill and going-                
          concern value, the fair market value of the stock of Schlegel UK            
          on the valuation date was no more than $21,846,000, that the                
          opinions of petitioner's experts independently establish the fair           





Page:  Previous  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  Next

Last modified: May 25, 2011