- 38 -
in total for the years in issue should be increased to
$17,125,719, an increase of $7,030,000.
The deficiencies respondent adopted at trial are
substantially lower than the amounts respondent determined and
are based on a different methodology from the method used to
calculate the notice amounts. Accordingly, generally petitioner
would need prove only that the commission it charged in the SCP
deal satisfied the arm's-length standard. See National
Semiconductor Corp. & Consol. Subs. v. Commissioner, T.C. Memo.
1994-195. Petitioner, however, contends that respondent's change
in method of calculating the deficiency, from a cost-plus
methodolgy to a comparable pricing methodology, raises new matter
for which respondent bears the burden of proof. We need not
decide in this case whether respondent's use of a different
method for calculating the deficiencies raises new matter
because, as discussed infra, the preponderance of the evidence
favors respondent.
Services Regulations
Section 1.482-2(b), Income Tax Regs., applies to
transactions in which one related entity provides marketing,
managerial, administrative, technical, or other services for
another related entity for less than an arm's-length charge. See
sec. 1.482-2(b)(1), Income Tax Regs. An arm's-length charge is
defined as the "amount which was charged or would have been
Page: Previous 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 NextLast modified: May 25, 2011