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Discussion
Petitioner contends that the SCP contract is an arm's-length
agreement between two unrelated parties (i.e., petitioner and
SCP) and, therefore, section 482 does not apply in the instant
cases. On brief, respondent contends, on the other hand, that
the SCP contract represents a complicated arrangement in which
petitioner functioned as a member of a combined group, not as an
independent negotiating party. The real issue, respondent
asserts in effect, is whether the income petitioner reported on
its U.S. corporate income tax returns for the years in issue
pertaining to the SCP deal constitutes a reasonable allocation of
petitioner's share of the Canelos organization's overall income
from that deal for those years. The parties have stipulated that
petitioner and the Canelos growers are controlled taxpayers
within the meaning of section 1.482-1(a), Income Tax Regs.
While, on its face, the SCP contract was between Dole and
petitioner, we are persuaded that, in substance, it was not
merely between those two parties. Rather, in our view, the SCP
deal, to which the SCP contract related, constituted a joint
venture between Dole on the one hand and the Canelos organization
on the other. It is clear from the record that Dole considered
petitioner and the Canelos growers to be indivisible components
of the Canelos organization and that it was with the Canelos
organization that Dole agreed to do business. The commission
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