Xilinx Inc. and Subsidiaries - Page 28

         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                   
              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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