Chelsea Products, Inc. v. Commissioner

The core of the present question is whether a reallocation of income is necessary under section 45, Internal Revenue Code, to prevent distortion of petitioner’s income. See Hearst Corp., 14 T. C. 575. Since no arm’s length bargaining occurred between these commonly controlled entities, see Helvering v. U. S. Industrial Alcohol Co. (W. Va.), (C. A. 2), 137 F. 2d 511; Eskimo Pie Corp., 4 T. C. 669 affd. (C. A. 3), 153 F. 2d 301, our concern must be whether petitioner received from the sales companies fair value for its products. If not, distortion of income resulted. G. U. R. Co., 41 B. T. A.…