-31-
payment made on a transfer of intangibles to a related foreign
corporation * * * be commensurate with the income attributable to
the intangible.” H. Rept. 99-426 at 414 (1985), 1986-23 C.B.
(Vol. 2) 424.
Respondent contends that the regulatory history, including
Treasury’s publication of Notice 88-123, 1988-2 C.B. 458 (the
White Paper), establishes that the commensurate with income
standard replaced the arm’s-length standard mandated in section
1.482-1, Income Tax Regs. We note that regulatory history, like
legislative history, is a far less accurate embodiment of intent
than plain language and is susceptible to a wide array of
interpretations. Nevertheless, our conclusion is consistent with
the White Paper and the 1992 and 1995 regulations. Contrary to
respondent’s contentions, the commensurate with income standard
was intended to supplement and support, not supplant, the arm’s-
length standard. Nothing in section 482, its accompanying
regulations, or its legislative history indicates that internal
measures of cost and profit should be used to the exclusion of
the arm’s-length standard.
The White Paper reexamined the theory and administration of
section 482 and concluded:
Looking at the income related to the intangible and
splitting it according to relative economic
contributions is consistent with what unrelated parties
do. The general goal of the commensurate with income
standard is, therefore, to ensure that each party earns
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