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determine * * * whether parties at arm’s length would share * * *
[the spread or the grant date value]”. Thus, respondent contends
that the spread and the grant date value amounts he determined
automatically meet the arm’s-length standard. In support of his
contention, respondent focuses on the meaning of the term
“generally” in section 1.482-1(b)(1), Income Tax Regs. He
asserts:
A rule that applies only “generally” must, by its own
terms, have exceptions. In light of the legislative
history and extensive regulations interpreting the 1986
commensurate with income statutory amendment, qualified
cost sharing arrangements constitute an appropriate
exception from the general rule.
According to respondent, “the identification of costs, and the
corresponding adjustments to the cost pool under qualified cost-
sharing arrangements, should be determined without regard to the
existence of uncontrolled transactions.” We disagree.
Respondent’s interpretation of the word “generally” is
incorrect because he ignores the preceding clause (i.e., “because
identical transactions can rarely be located”). The regulation
simply states that “comparable transactions” are the broad
exception available when there are no identical transactions.
See Union Carbide Corp. & Subs. v. Commissioner, 110 T.C. 375,
384 (1998) (stating “When the plain language of the statute or
regulation is clear and unambiguous, * * * the inquiry * * *
[ends].”). The regulation does not state that any allocation
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