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Section 1.993-3(c)(2)(iii), Income Tax Regs., is designed to
determine whether a corporation is engaged in the manufacture or
production of a product in the United States for purposes of
section 993, one of the provisions applicable to a domestic
international sales corporation (DISC). That regulation pro-
vides:
(iii) Operations generally considered to consti-
tute manufacturing. Property is manufactured or pro-
duced by a person if the operations performed by such
person in connection with such property are substantial
in nature and are generally considered to constitute
the manufacture or production of property.
"Assembly or packing operations" are not operations generally
considered to constitute the manufacture of property under sec-
tion 1.993-3(c)(2)(iii), Income Tax Regs. See sec. 1.993-
3(c)(2)(i), Income Tax Regs. Nonetheless, judicial interpreta-
tions of language in section 1.993-3(c)(2)(iii), Income Tax
Regs., provide useful guidelines for interpreting the same lan-
guage in section 1.954-3(a)(4)(iii), Income Tax Regs. Cf. Webb
Export Corp. v. Commissioner, supra at 142-143.
In the first case in which we considered and applied section
1.993-3(c)(2)(iii), Income Tax Regs., the Webb Export Corp. case,
the taxpayer purchased standing timber and harvested that timber
through a series of operations including felling, delimbing,
bucking, skidding, loading, and hauling the timber. Id. at 133-
134. We found therein: "These various steps, a time-consuming,
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