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Petitioner somewhat inconsistently asks at some points that
the Compaq Asia price be adjusted upward and at others that no
section 482 adjustment be made. To the extent that petitioner
implies that it is entitled to an affirmative adjustment reducing
its U.S. tax liability, the evidence shows only consistency with
arm's-length pricing, not inadequate pricing. In view of the
necessity of approximations and adjustments, we are not persuaded
that the prices contemporaneously charged by Compaq Asia to
Compaq U.S. and used in petitioner's tax reporting should be
retroactively adjusted to the advantage of petitioner.
Respondent, despite the Court's urging at the conclusion of
trial, provides no alternative adjustment calculations.
Respondent attacks petitioner's CUP analysis on several grounds,
arguing that flaws in petitioner's reasoning undermine the
credibility of petitioner's CUP. First, respondent argues that a
majority of transactions constituting the CUP are consignment
purchases converted to turnkey prices, the turnkey equivalent,
and do not represent actual sales. Respondent argues that these
transactions cannot be used as comparable prices to the turnkey
transactions with Compaq Asia, because consignment purchases
cannot accurately be converted to comparable prices.
Respondent's argument is unsupported by the record and was
contradicted by respondent's expert, Chandler. Chandler's
testimony on cross-examination included the following:
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