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paid for transfers by the same transferor to unrelated parties
involving the same or similar intangible property under the same
or similar circumstances. See id. If no sufficiently similar
transfers can be found, section 1.482-2(d)(2)(iii), Income Tax
Regs., sets forth a list of factors that may be considered in
arriving at the amount of the arm’s-length consideration. The
arm’s-length nature of an agreement is determined by reference
only to facts in existence at the time of the agreement. See
Bausch & Lomb, Inc. v. Commissioner, 92 T.C. 525, 601 (1989),
affd. 933 F.2d 1084 (2d Cir. 1991).
No evidence of similar intangibles being transferred to an
unrelated party was produced. Hyatt Domestic’s transaction with
HIC and HIC’s with its subsidiaries concerned services and other
aspects, in addition to the names and marks. In each instance,
the names and marks were part of a larger package including the
provision of various services. Accordingly, we utilize the
factors specified in section 1.482-2(d)(2)(iii), Income Tax
Regs., to formulate our holding, noting that the parties’ experts
have not specifically addressed those factors.
One significant factor to consider would be the prevailing
rates in the industry. Ideally, the 1968 rates for trade names
and marks in the hotel industry would be a starting point. The
hotel franchise rates presented in the record, however, cover the
period 1979 through 1988. The licensing agreement here was
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