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controlled group and an unrelated party, as well as unrelated
sales in which none of the parties are members of the controlled
group. Uncontrolled sales are considered "comparable" to
controlled sales if the physical property and circumstances
involved in the uncontrolled sales are identical to the physical
property and circumstances involved in the controlled sales or if
such properties and circumstances are so nearly identical that
differences either have no effect on price or such differences
can be reflected by a reasonable number of adjustments to the
price of the uncontrolled sales. Adjustments can be made only
where such differences have a definite and reasonably
ascertainable effect on price. Some of the differences listed in
the regulations as possibly affecting price are differences in
quality, terms of sale, intangible property associated with the
sale, level of the market, and geographic market in which the
sales takes place. Whether differences render sales
noncomparable depends upon the particular circumstances and
property involved. See sec. 1.482-2A(e)(2), Income Tax Regs.
Petitioner has presented substantial evidence of
uncontrolled transactions with unrelated subcontractors.
Petitioner's CUP analysis is predicated on Compaq U.S. purchases
of 3.6 million PCA's from unrelated subcontractors between 1990
and 1993. The aggregate purchase price of these PCA's totaled
$597 million on a turnkey equivalent basis and was 93.1 percent
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