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Another factor in determining whether a particular
transaction was a sham is the presence or absence of arm's-length
price negotiations and the relationship between the price and
fair market value. See Helba v. Commissioner, 87 T.C. 983, 1005
(1986), supplemented by T.C. Memo. 1987-529, affd. 860 F.2d 1075
(3d Cir. 1988); see also Karme v. Commissioner, 73 T.C. 1163,
1186-1190 (1980), affd. 673 F.2d 1062 (9th Cir. 1982). In
deciding such issues, courts often look to expert opinions. The
Court is not bound by the opinion of any expert, and we may
accept or reject in full or in part experts' opinions proffered
by the parties. See Helvering v. National Grocery Co., 304 U.S.
282, 294-295 (1938); Seagate Tech., Inc., & Consol. Subs. v.
Commissioner, 102 T.C. 149, 186 (1994); Parker v. Commissioner,
86 T.C. 547, 562 (1986). Both petitioner and respondent offered
the reports and testimony of various expert witnesses in an
effort to establish an arm's-length price that petitioner could
have obtained for the coverage provided by NUF and OPL.
Respondent offered the expert report of Mr. Kelley for the
purpose of proving that, within the insurance industry, the
arm's-length price that petitioner could have obtained for
coverage associated with petitioner's excess value activity would
have been substantially less than 25 cents per $100 of excess
value. Mr. Kelley has in excess of 30 years of experience buying
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