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Petitioners’ expert conceded that the services of IPS were
integral in that those services were provided to unrelated
parties, although petitioner’s expert also concluded that IPS’
activities were minimal during the years in issue. It appears
that IPS was uniquely capable of providing its services since the
design manuals and area programs, although tailored to suit a
particular hotel, were intended to exemplify how a Hyatt
International hotel should be constructed or operated. No other
design company would have access to this information. Thus, we
find the activities of IPS are integral. Other services,
including marketing and coordination of insurance and benefits
were performed and may be integral, but there is no way to
distinguish the costs of the other services provided to HHK and
HS from the total costs to the Hyatt International group
entities. The subsidiaries or the hotel owners paid the direct
costs; however, the indirect costs (i.e., overhead) were not
included. Thus, whether we conclude that such services were or
were not integral, we are effectively unable to determine the
31(...continued)
in the operations of the recipient.
(iv) Services are an integral part of the business
activity of a member of a controlled group where the
recipient has received the benefit of a substantial
amount of services from one or more related parties
during its taxable year. * * *
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