- 45 -
Using comparable transactions from years prior to the
taxable years in issue is common in section 482 cases. See
Sundstrand Corp. & Subs. v. Commissioner, 96 T.C. at 272-276,
305-309, 375-377, 392-395 (using comparable transactions from up
to 20 prior years); Bausch & Lomb, Inc. v. Commissioner, supra at
587, 593 (using comparable sales from prior years); Ciba-Geigy
Corp. v. Commissioner, 85 T.C. 172, 215-216, 224 (1985) (using
comparable transactions from up to 12 years prior to the years in
issue).
The transactions from 1990 and 1993 identified and used by
petitioner did not significantly impact the conclusions of the
CUP method. During 1990 to 1993, the prices that were paid to
the unrelated subcontractors averaged 93.1 percent of the Compaq
U.S. standard cost. During 1990 to 1992, the arm's-length prices
that were paid to the unrelated subcontractors averaged
93.9 percent of the Compaq U.S. standard cost, and, during 1991
to 1992, the arm's-length price that was paid to the PCA
subcontractors averaged 92.2 percent of the Compaq U.S. standard
cost. Thus, to the extent that uncontrolled PCA prices changed
over time, the Compaq U.S. standard costs moved with the
uncontrolled prices.
Ultimately, respondent argues that, because the CUP method
cannot be applied, a profits-based fourth method is the
appropriate method of determining arm's-length prices in this
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