- 95 -
Arm’s-length bargaining is an obvious characteristic of
commercially valid transactions. Id.; see also Karme v.
Commissioner, supra. To determine that an arm’s-length transaction
took place, we must find that the buyer was motivated to secure the
lowest purchase price possible and, conversely, that the seller
looked to obtain the highest price. See Fox v. Commissioner, 80
T.C. 972, 1009 (1983), affd. without published opinion 742 F.2d
1441 (2d Cir. 1984), affd. sub nom. Barnard v. Commissioner, 731
F.2d 230 (4th Cir. 1984), affd. without published opinion 734 F.2d
9 (3d Cir. 1984), affd. without published opinions sub nom. Hook v.
Commissioner, Kratsa v. Commissioner, Leffel v. Commissioner,
Rosenblatt v. Commissioner, Zemel v. Commissioner, 734 F.2d 5, 6-7,
9 (3d Cir. 1984).
Here, it is evident that Ms. Grossman, who reviewed and
recommended the transaction for NEFI, had little interest in
securing the lowest purchase price for the computers. Indeed, the
opposite was true; the greatest projected profits stemmed from tax
deductions which in turn increased as the purchase price increased.
Cf. Patin v. Commissioner, 88 T.C. 1086, 1122 (1987), affd. without
published opinion sub nom. Hatheway v. Commissioner, 856 F.2d 186
(4th Cir. 1988), affd. sub nom. Skeen v. Commissioner, 864 F.2d 93
(9th Cir. 1989), affd. without published opinion 865 F.2d 1264 (5th
Cir. 1989), affd. sub nom. Gomberg v. Commissioner, 868 F.2d 865
(6th Cir. 1989); Ferrell v. Commissioner, 90 T.C. 1154, 1186
(1988).
Page: Previous 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 NextLast modified: May 25, 2011