H Group Holding, Inc. and Subsidiaries - Page 74




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          length.  See Seagate Tech., Inc., & Consol. Subs. v.                         
          Commissioner, supra at 164.                                                  
               If it is established that there was an abuse of the                     
          Commissioner’s discretion and a taxpayer fails to show that                  
          questioned transactions met an arm’s-length standard, then the               
          Court must decide the amount of an arm’s-length allocation.  See             
          Sundstrand Corp. v. Commissioner, supra at 354.                              
          IV.  Was the Commissioner’s Determination Arbitrary, Capricious,             
          or Unreasonable?                                                             
               A.  In General                                                          
               Petitioners argue that respondent has abandoned the grounds             
          for the determinations in the deficiency notice and, in effect,              
          conceded that the determinations are arbitrary, capricious, or               
          unreasonable.  Petitioners also argue that respondent’s                      
          determinations were in other respects arbitrary, capricious, and             
          unreasonable.  Respondent disagrees and contends that no                     
          abandonment of theory or methodology occurred and that the trial             
          position of respondent is compatible with the determinations in              
          the deficiency notice.  We consider this portion of the                      
          controversy from two different perspectives.  First, we consider             
          the effect, if any, of respondent’s substitution of different                
          experts, for trial purposes, from those whose reports were used              
          for the bases of the determinations in the deficiency notice.                
          Then, we consider, generally, whether respondent’s determination             






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