- 58 -
(4) Net management income from HHK and HS to HIC for
services provided by HIC.13
In controversy are Hyatt Domestic’s taxable years ending
January 31, 1980, through January 31, 1988, and HIC’s taxable
years ending December 31, 1976, through December 31, 1983.
III. Section 482--Background
Under section 482, the Commissioner has broad authority to
prevent the artificial shifting of income and to allocate income
among commonly controlled corporations in order to place them on
a parity with uncontrolled, unrelated taxpayers. See Seagate
Tech., Inc., & Consol. Subs. v. Commissioner, 102 T.C. 149, 163
(1994); Sundstrand Corp. v. Commissioner, 96 T.C. 226, 352-353
(1991); see also Bausch & Lomb, Inc. v. Commissioner, 92 T.C.
525, 581 (1989), affd. 933 F.2d 1084 (2d Cir. 1991); Edwards v.
Commissioner, 67 T.C. 224, 230 (1976); sec. 1.482-1(b)(1), Income
Tax Regs. A business purpose for an arrangement or a set of
transactions does not by itself insulate a taxpayer from a
section 482 allocation. See Sundstrand Corp. v. Commissioner,
supra at 353.
13 In the deficiency notices, respondent determined
allocations from Hyatt of Panama to HIC for both trade names and
marks and management services. Respondent’s trial position
included only allocations from the HHK and HS. Because
respondent no longer relies on or advocates the notice
determination on this aspect, we treat respondent’s abandonment
of the allocations from Hyatt of Panama as a concession of these
adjustments.
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