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See , e.g., PPG Industries Inc., 55 T.C. at 998 (functions performed by the controlled corporation, such as postsales services, marketing and licensing of technology, were not performed by the uncontrolled corporation and therefore its transactions were not comparably); Du Pont, 608 F. 2d at 453I (the difference in functions performed by the controlled corporation reflected differences in the level of the market and resulted in a finding by the court of non-comparability). But see Bausch & Lomb, 92 T.C. at 588-589 (although the controlled corporation exercised not only distribution functions, like the comparables, but also manufacturing, sale and research and development, such circumstances did not hinder the use of the comparables.

In a number of cases a different level of risk affected comparability. See, e.g., PPG Industries Inc., 55 T.C. at 970 overruled on other issues, Latham Park Manor vs. Commissioner, 69 T.C. 199 (1977), affd without published opinion 618 F.2d 100 (4th Cir. 1980) (the tested partys functions and the uncontrolled comparables functions were not comparable because of the difference in credit risk); Du-Pont, 608 F.2d at 453 (in rejecting comparability the court noted the difference in risks between the tested party and the proferred comparables with regard to shipping and warehouse risk, possible termination of distribution contract, and the business cycle of different markets); Paccar Inc. 85 T.C. at 779 and 794 (the risk that the tested party might not recover its resale costs affected comparability). In other cases, although the tested party was subject to different risks than the comparable, the transactions were held to be comparable. See, e.g., Bausch & Lomb, 933 F.2d at 1084 (the tested party did not incur research and development risk).

See also PPG Industries Inc., 55 T.C. at 995 (uncut glass sheets were considered comparable to cut and packed glass sheets); R.T.French v. Commissioner, 60 T.C. 836, 853 (1973) (the same contract for the sale and license of a mashed potatoes product was comparable in two different periods of time, when there was control in one period and not in another); Bausch & Lomb, 933 F.2d at 1090 (soft contact lenses were considered

fungible, the sales of which were appropriately compared, regardless of differences in manufacturing process); Perkin-Elmer Corp., 66 T.C.M. at 661 (tested partys instruments and uncontrolled partys instruments were not similar because of differences in technical complexity); Seagate Technology, 102 T.C. at 187 (where the property was identical, the CUP method was used). Transfer prices of services are dealt with in a number of cases. See, e.g., U.S. Steel Corp. v. Commissioner, 617 F.2d 942, 947 (2nd Cir. 1980) (where the court held: the evidence was sufficient to show similar enough transactions with independent buyers to establish that the price Steel [the taxpayer] paid Navios [the related party] was an arms length price); Westreco Inc. v. Commissioner, 64 T.C.M. (CCH) 849 (1992) (comparables for R&D services were chosen on the basis of financial factors, business relations with clients, and economic and business risks). -

- Product research, development - Purchasing materials, equipment - Controlling stocks of and finished goods - Developing and budgets - Quality control -


and - Electronic data processing

supplies and - Public relations raw materials - Production planning scheduling administering - Industrial engineering and

Production of finished goods Packaging and labeling of products Sales Marketing Shipping of products to customer Facilities engineering

- Personnel - Manufacturing engineering - Maintenance: building, grounds and equipment

- Management and supervision of offshore operations - Manufacturing site selection - Administrative services - Government affairs - Finance and control - Accounting services - Arranging product liability insurance - Establishing and controlling pricing policy - Technical service

Market risk Inventory risks: raw materials, work in progress and finished goods Defective products and warranty Credit risk Product liability risk Foreign exchange risk Environmental risk

Patents Unpatented technical know-how Formulae Trademarks and brand names Trade names Licenses Copyrights Technical data Ability to provide after-sales service Customer list High caliber personnel, such as strong sales force