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payable to petitioner was merely one part of the overall earnings
due the Canelos organization relating to the SCP deal. How the
Canelos organization internally allocated its share of the income
generated by the SCP deal was inconsequential to Dole as long as
Dole received its agreed-upon share of the joint venture's
earnings. Thus, the question for decision is whether the income
the Canelos growers allocated to petitioner pertaining to the SCP
deal for the years in issue clearly reflected its share of the
combined income of the controlled taxpayers. Accordingly,
contrary to petitioner's assertion, section 482 does apply in the
instant cases.
We must decide whether the commission rate paid petitioner
in the SCP deal represents an arm's-length charge for its
services. If it does not, then we must decide what would be an
arm's-length charge for those services.
Arm's-Length Commission Rate
Petitioner contends that Mr. Canelos and Mr. Maldonado
negotiated a fair commission rate for the services petitioner
rendered relating to the SCP deal, considering the expected
volume, industry standards, and the amount SCP was willing to
pay. Petitioner maintains that it wanted the highest possible
commission it could obtain because the Canelos group kept 100
percent of any commission petitioner received but received only
55 percent of any farming profits.
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