- 59 - Section 482 determinations are to be sustained absent a showing that the Commissioner’s discretion was abused. See Paccar, Inc. v. Commissioner, 85 T.C. 754, 787 (1985), affd. 849 F.2d 393 (9th Cir. 1988). Consequently, taxpayers bear a heavier than normal burden of proving that the Commissioner’s section 482 allocations are arbitrary, capricious, or unreasonable. See Your Host, Inc. v. Commissioner, 489 F.2d 957, 960 (2d Cir. 1973), affg. 58 T.C. 10, 23 (1972); Seagate Tech., Inc. & Consol. Subs. v. Commissioner, supra at 164; G.D. Searle & Co. v. Commissioner, 88 T.C. 252, 359 (1987). Whether the Commissioner’s discretion has been abused is a question of fact. See American Terrazzo Strip Co. v. Commissioner, 56 T.C. 961, 971 (1971). In reviewing the reasonableness of the Commissioner’s allocation under section 482, we focus on the reasonableness of the result, not the details of the methodology employed. See Bausch & Lomb, Inc. v. Commissioner, supra at 582; see also Eli Lilly & Co. v. United States, 178 Ct. Cl. 666, 676, 372 F.2d 990, 997 (1967). The applicable standard is arm’s-length dealing between taxpayers unrelated either by ownership or control. See sec. 1.482- 1(b)(1), Income Tax Regs.14 Taxpayers bear the burden of showing that the standard they used or that they proposed is arm’s 14 References to the income tax regulations under sec. 482 are to the 1968 regulations as amended and in effect for the tax years under consideration.Page: Previous 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 Next
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