United Parcel Service of America - Page 109




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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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