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Section 48228 gives the Commissioner authority to reallocate
income and deductions among certain related taxpayers.
Respondent’s determination under section 482 is presumptively
correct, and the burden of disproving that determination lies
with petitioners. Dolese v. Commissioner, 811 F.2d 543, 546
(10th Cir. 1987), affg. 82 T.C. 830 (1984).
The purpose of section 482 is to place a controlled taxpayer
on a tax parity with an uncontrolled and unrelated taxpayer by
determining the true taxable income of the controlled taxpayer
using the standard of an uncontrolled taxpayer dealing at arm’s
length with another uncontrolled taxpayer. Ciba-Geigy Corp. v.
Commissioner, 85 T.C. 172, 221 (1985); Huber Homes, Inc. v.
Commissioner, 55 T.C. 598, 605 (1971); sec. 1.482-1(a)(1) and
(b)(1), Income Tax Regs. An interest rate satisfies the arm’s-
length standard under section 482 if it is a rate that was
actually charged, or would have been charged, at the time the
indebtedness arose, in independent transactions with or between
28SEC. 482. ALLOCATION OF INCOME AND DEDUCTIONS AMONG
TAXPAYERS.
In any case of two or more organizations * * *
owned or controlled directly or indirectly by the same
interests, the Secretary may * * * allocate gross
income, deductions, credits, or allowances between or
among such organizations * * * if he determines that
such * * * allocation is necessary in order * * *
clearly to reflect the income of any of such
organizations * * *
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