- 73 - This approach was used because it was thought that a hotel’s geographical distance from Hyatt Domestic’s U.S. sales offices would affect the benefits; i.e., the greater the distance, the less the benefit. Respondent, however, concluded that the possibility for tax avoidance was lurking in these circumstances under which many hotels were being charged less than an equally apportioned share of the chain service allocation. The use of total rooms per hotel adjusted for the distance of a hotel from the U.S. sales offices, to some extent, appears to reasonably account for the circumstances. Beginning February 1, 1980, cross-billing and reimbursement were discontinued under the assumption that the benefits exchanged were equal, although both organizations continued to share chain services. Both Hyatt Domestic and the Hyatt International group invested in establishing chain services and made a business decision to share those services. To the extent that they exchanged services of equal value, we hold that no allocation between HIC and Hyatt Domestic is warranted. To the extent that respondent’s determinations included allocations of income between Hyatt Domestic and HIC for chain services it was an abuse of discretion. We note that any income allocation between HIC and Hyatt Domestic would have been made under the 1.5 percent royalty adjustment.Page: Previous 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 Next
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