- 10 -
an arrangement.” (Emphasis added.) Accordingly, there is no
requirement that the Commissioner have actual knowledge of an
arm’s-length situation as a prerequisite to the determination of
an allocation in the case of a cost-sharing arrangement.
In addition, the regulatory standard does not require that
the Commissioner rely on fact, as opposed to opinion, before
making an allocation where there is a bona fide cost-sharing
arrangement. There is no specific minimum standard prerequisite
to the Commissioner’s determination that an allocation should be
made. Such a determination, however, may ultimately be found to
be arbitrary, capricious, or unreasonable, but that standard is
not the threshold enabling the Commissioner’s determination that
an allocation should be made.
We do not conclude that respondent’s determination is or is
not well founded. Likewise, we do not, in the context of this
opinion, accept, agree with, or disagree with respondent’s
expert’s opinion. We must however, observe that for better or
for worse, expert witnesses have become the prognosticators and
the bane of transfer pricing cases. Both parties may rely on
expert advice/opinions in reaching their conclusions and/or
defending their positions.
Here we will be engaged in deciding whether the sharing of
stock option costs is a circumstance “comparable to those which
would have been adopted by unrelated parties”. Sec. 1.482-
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011