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are the same verbatim as the corresponding argument in the brief
submitted in Hachette.
Petitioners contend that section 458(b)(6) provides an
explicit formula for determining the adjustment to income: the
amount of the credit against sales price which the taxpayer must
grant to the purchaser. They assert that the language of section
458(b)(6) is unambiguous, and that the formula contained in
section 1.458-1(g), Income Tax Regs., transforms the "amount
excluded" based on credit given for returned items into an amount
equal to the distributor's gross profit on those items.
In response to these arguments, this Court in Hachette held
the regulation valid. Id. at (slip op. at 27). After
examining the legislative history, the Court determined that the
regulation is consistent with generally accepted accounting
principles and with sections 446 and 471. Id. at (slip op.
at 20-21). The Court also held that there is no evidence that
Congress intended that a taxpayer who did not bear any costs
could forgo the correlative cost adjustments. Id. at (slip
op. at 22). Because distributors were reimbursed by publishers,
they should not get the benefit of the deduction without bearing
the risk. Id. In view of the identity of issues and the
detailed analysis by this Court in Hachette, it is unnecessary to
go over the same ground again. We follow Hachette.
Decision will be entered
for respondent.
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