-23-
Section 482 places a controlled taxpayer on a tax parity
with an uncontrolled taxpayer by determining the true taxable
income of the controlled taxpayer. Sec. 1.482-1(a)(1), Income
Tax Regs. In determining true taxable income, “the standard to
be applied in every case is that of a taxpayer dealing at arm's
length with an uncontrolled taxpayer.” See United States Steel
Corp. v. Commissioner, 617 F.2d 942, 947 (2d Cir. 1980) (stating
the “‘arm's length’ standard is * * * meant to be an objective
standard that does not depend on the absence or presence of any
intent on the part of the taxpayer to distort his income.”),
revg. T.C. Memo. 1977-140; sec. 1.482-1(b)(1), Income Tax Regs.
Because identical transactions are rare, the arm’s-length result
will “generally * * * be determined by reference to the results
of comparable transactions under comparable circumstances.” Sec.
1.482-1(b)(1), Income Tax Regs.
B. Application of Section 482 to Qualified Cost-Sharing
Agreements
Section 482 provides that “In the case of any transfer * * *
of intangible property * * * the income with respect to such
transfer * * * shall be commensurate with the income attributable
to the intangible.” Participants in a qualified cost-sharing
agreement (QCSA) relinquish exclusive ownership of all
exploitation rights in new intangibles they individually develop
and agree to share ownership of, and costs associated with, such
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