US Golf (“USG”), a US corporation, manufactures red golf balls and blue golf balls in the US and sells them to EuroCo, a Netherlands corporation which is 100% owned by USG. EuroCo packages the red balls and sells them to independent distributors outside of the Netherlands for a gain of $100. EuroCo packages the blue balls and sells them to independent distributors in the Netherlands for a gain of $200. EuroCo buys white golf balls from an unrelated Japanese manufacturer and sells them to an independent distributor outside of the Netherlands for a gain of $300.
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