-32-
the income or return from the intangible that an
unrelated party would earn in an arm’s length transfer
of the intangible.
Notice 88-123, 1988-2 C.B. 458, 472. In 1992, respondent
promulgated regulations, interpreting section 482, which were
finalized in 1995. Neither the 1992 nor 1995 regulations contain
language indicating any intention to remove the arm’s-length
standard with respect to cost-sharing determinations or prevent
consideration of uncontrolled transactions. In fact, the
preamble to the 1992 proposed regulations states that section
1.482-1(b)(1), Income Tax Regs., “clarifies the general meaning
of the arm’s length standard * * * [as] whether uncontrolled
taxpayers exercising sound business judgment would have agreed to
the same terms given the actual circumstances under which
controlled taxpayers dealt.” See DHL Corp. & Subs. v.
Commissioner, 285 F.3d 1210, 1222 (9th Cir. 2002) (relying on the
preamble to interpret section 1.482-2(d), Income Tax Regs.);
Armco, Inc. v. Commissioner, 87 T.C. 865, 868 (1986) (stating "A
preamble will frequently express the intended effect of some part
of a regulation * * * [and] might be helpful in interpreting an
ambiguity in a regulation."); Proposed Income Tax Regs., 57 Fed.
Reg. 3571 (Jan. 30, 1992).
Finally, respondent contends that the general rules of
statutory interpretation require us to construe the regulations
in a manner that “avoids conflict within the regulatory scheme,
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011