§235-103  Distortion of income.  When a
taxpayer so conducts business as either directly or indirectly to benefit
stockholders thereof, or any other person interested therein, by selling
products or the goods or commodities in which the taxpayer deals at less than
the fair price that could be obtained for them, or where a corporation, a
substantial portion of the capital stock of which is owned either directly or
indirectly by another corporation, acquires or disposes of the products of the
corporation so owning a substantial portion of its stock in such manner as to
create a loss or improper income to either of the corporations, or where a
partnership or individual owns an interest in another corporation or business
either directly or indirectly and acquires and disposes of the products of such
other business in such manner as to create a loss or improper income to either
of the businesses, and generally in all cases where different forms of business
enterprise are used in conjunction with one another for the purpose, among
others, of diverting profits reasonably and properly made by one factor agency
or segment of the business to another, the director of taxation may determine
the amount of tax upon either or both of the enterprises for the taxable year, having
due regard to the reasonable profits which but for such arrangement,
understanding, business device, or organization might or could have accrued to
either or both of the enterprises. [L Sp 1957, c 1, pt of §2; am L Sp 1959 2d,
c 1, §16; Supp, §121-37; HRS §235-103; gen ch 1985]