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by B&L Hong Kong constitutes foreign base company sales income as
defined in section 954(d)(1) that is includible in petitioners'
gross income under section 951(a)(1). Petitioners argue that
that income is not foreign base company sales income as defined
in that section because the sunglasses assembled by B&L Ireland
and by B&L Hong Kong were manufactured by those companies within
the meaning of section 954(d)(1) and section 1.954-3(a)(4)(ii)
and (iii), Income Tax Regs. Petitioners bear the burden of proof
on that issue. Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933). We need not address petitioners' contention that the
sunglass assembly operations of B&L Ireland and of B&L Hong Kong
satisfy section 1.954-3(a)(4)(ii), Income Tax Regs. This is
because we find that those operations satisfy the facts and
circumstances test of section 1.954-3(a)(4)(iii), Income Tax
Regs. See sec. 1.954-3(a)(4)(i), Income Tax Regs.
Before turning to the application of the facts and circum-
stances test of section 1.954-3(a)(4)(iii), Income Tax Regs., to
the facts and circumstances established by the record in these
cases, we summarize our views of the experts on whom the parties
rely to support their respective positions (experts) as to
whether the sunglass assembly operations conducted by B&L Ireland
and by B&L Hong Kong constitute the manufacture of sunglasses
under section 954(d)(1) and the regulations thereunder.
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