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costs for the PCA's. The analysis indicates that Compaq U.S.
paid an average price to the unrelated subcontractors of
100.2 percent of Compaq U.S. standard cost. If the average is
weighted to reflect Compaq Asia production of power supplies,
processors, memory boards, video boards and backplane/other
boards in 1991 and 1992, the analysis results in an average price
of 93.1 percent of Compaq U.S. standard cost.)
ULTIMATE FINDINGS OF FACT
Compaq U.S. bought 3.6 million PCA's worth $597 million on a
turnkey equivalent basis from unrelated subcontractors. The
PCA's were nearly identical to PCA's sold by Compaq Asia to
Compaq U.S. After adjustment for differences in physical
property and circumstances of the sales, the prices that Compaq
U.S. paid to the unrelated subcontractors for PCA's were
comparable to the prices that Compaq U.S. paid to Compaq Asia for
PCA's.
OPINION
The issue that we are considering here is whether the
transfer prices for PCA's that were charged between Compaq U.S.
and Compaq Asia meet the arm's-length standard of section 482.
Petitioner asserts that respondent's notice determinations are
unacceptable and that comparable transactions between unrelated
parties prove that the transfer prices satisfy the arm's-length
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