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Petitioners read the legislative history differently. In
their view, these materials disclose that Congress specifically
intended that taxpayers electing to exclude sales proceeds also
continue to be entitled to deduct the cost of goods sold in the
year of the sales. The asymmetrical treatment of revenues and
costs that the Regulation seeks to correct was actually a
deliberate choice to remedy the problem as Congress perceived it.
Petitioners' argument attaches great significance to the
characterization of excess copies as promotional materials which
appears in all of the committee reports, the hearings, and the
text of the original bills. H.R. 5161 and H.R. 3050, before
their amendment in the second session of the 95th Congress, would
have applied to "sales of magazines or other periodicals for
display purposes." The House and Senate reports on H.R. 3050
described the deliberate overstocking of retailers by
distributors as "a mass-marketing promotion technique". H. Rept.
95-1091, supra at 3; S. Rept. 95-1278, supra at 4. Petitioners
conclude from this evidence that Congress "chose, through section
458, to treat the transfer of * * * [excess copies] to retailers
as a promotional device, not as a sale. Accordingly, section 458
eliminates the sale proceeds but not the distributors' cost for
the display items." We are not persuaded.
What is clear from the legislative history is that Congress
believed that the shipment of excess copies by publishers and
distributors to retailers with no expectation that they would be
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