- 16 -
MGM/UA. See Newark Morning Ledger Co. v. United States, supra at
566; Capital Blue Cross & Subs. v. Commissioner, 122 T.C. 224,
248 (2004). Moreover, we are unable to ascribe to any of the
relationships a limited useful life of a specific duration. Cf.
Capital Blue Cross & Subs. v. Commissioner, supra at 255-257.
Accordingly, we sustain respondent’s determinations disallowing
petitioners’ claimed deductions.
II. Tax Consequences of the Loan Assumption
Respondent, relying on section 482, contends that the
CIC/CIHI transaction was not arm’s length and should be:
recast * * * [as] a payment by CIC of $49,784,881 to
Holdings to fully extinguish its debt followed by a new
loan from Holdings to CIHI in the same amount at the
arm’s length rate of 8%. The excess 3.5% interest paid
by CIHI to Holdings should be disallowed as a deduction
and deemed distributed by CIHI to Petitioner and by
Petitioner to Carlton followed by a constructive
contribution of this amount by Carlton to Holdings.
Under section 482, the Commissioner has the authority to
reallocate income among members of a controlled group where a
controlled taxpayer’s taxable income is not equal to what it
would have been had the taxpayer been dealing at arm’s length
with an uncontrolled taxpayer. Sec. 1.482-1(f)(1), Income Tax
Regs. If the Commissioner, however, abuses his discretion and
makes a determination that is arbitrary, capricious, or
unreasonable, that determination will not be sustained. See
Seagate Tech., Inc. v. Commissioner, 102 T.C. 149, 164 (1994);
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