- 50 -
FYE Amount
6/30/89 $1,307,000
6/30/90 3,538,000
6/30/91 1,153,000
6/30/92 1,032,000
Total 7,030,000
Dr. Frisch used a profit-split analysis and a comparison
with industry averages to test the reasonableness of his
conclusions. He stated that the two reasonableness tests
confirmed that applying the otros growers' commission rate, with
adjustments, to petitioner's related-party transactions would
result in petitioner's earning appropriate levels of income
during 1989 through 1992. Further, he stated, those tests
indicate that petitioner's income levels as reported on its tax
returns for the years in issue were not consistent with arm's-
length behavior. Therefore, Dr. Frisch concluded that it was
necessary to adjust petitioner's commissions in order to make
them consistent with the arm's-length standard.
Respondent also submitted the expert report of Enrique E.
Figueroa (Dr. Figueroa). He has a Ph.D. in agricultural
economics from the University of California-Davis and is employed
as a research associate for the Department of Agricultural,
Resource and Managerial Economics at Cornell University. Dr.
Figueroa provided general background information on the produce
industry.
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