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that neither Congress could have intended when it enacted section
954(d)(1) nor the Treasury could have meant when it promulgated
section 1.954-3(a)(4)(iii), Income Tax Regs. Dr. Philpott opined
during the trial of these cases that, unless a company designed a
product, it could not be considered the manufacturer of that
product if it performed only assembly, and no parts fabrication
operations. However, he further testified that product design
was not considered part of the manufacturing process during the
early and mid-1960s when Congress enacted subpart F and the
Treasury issued the regulations thereunder.
We also note that Dr. Philpott opined that the assembly of
automobile parts into automobiles constitutes a substantial
transformation of those parts. That opinion contradicts the view
of the Treasury set forth in example two of section 1.954-
3(a)(4)(iii), Income Tax Regs., that the assembly of automobile
parts into automobiles does not constitute a substantial trans-
formation of those parts under section 1.954-3(a)(4)(ii), Income
Tax Regs.
In conclusion, we did not find Dr. Philpott's opinions to be
helpful in resolving the issues presented in these cases, and we
do not rely on them in making our findings and reaching our
conclusions herein.
Both parties rely on the opinions of experts who performed
quantitative analyses to determine whether the respective assemb-
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