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Petitioner's Expert Witness
Petitioner submitted the expert report of Dr. Roberta Cook
(Dr. Cook). She has a Ph.D. in agricultural economics and is
employed as an extension economist in the Department of
Agricultural Economics at the University of California-Davis.
Dr. Cook's major area of specialization is fresh fruit and
vegetable marketing. She also works in the broad area of food
distribution. Dr. Cook concluded that, taking into consideration
the nature and volume of the products, as well as the functions
performed and the risks assumed in petitioner's operations,
petitioner was charging its related growers a commission rate
consistent with industry standards and in accordance with section
1.482-2(b)(3), Income Tax Regs.
In assessing the arm's-length nature of petitioner's
commission rate, Dr. Cook considered: (1) Produce distribution
industry standards; (2) distribution agreements between
petitioner and unrelated parties, particularly SCP, but also Bud
Antle, Apache, Van Dyke, and the otros growers; (3) comparable
agreements between other unrelated parties (specifically Fresh
Choice); (4) the nature of the products being distributed; (5)
the volume of products being sold; (6) the types of functions and
services performed; and (7) the risks assumed by the parties to
the agreements. Dr. Cook stated that the SCP contract was a
third-party growing/marketing agreement between SCP, petitioner,
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