- 83 - companies (1) leased production facilities to assemble sunglasses and warehouses to store finished goods; (2) employed management teams to prepare production plans and order parts from their suppliers; (3) hired and trained the necessary personnel to carry out their operations; (4) inspected purchased parts for defects and prepared those parts for assembly; (5) assembled sunglass parts into finished sunglasses; (6) inspected finished sunglasses for cosmetic and functional defects; and (7) cleaned and packaged sunglasses to prepare them for distribution. All of those ac- tivities were necessary and essential to the assembly by B&L Ireland and by B&L Hong Kong of the purchased sunglass parts into finished, quality sunglasses that met B&L's quality standards and that were ready for sale to the ultimate consumers. Respondent also argues that the respective assembly opera- tions conducted by B&L Ireland and B&L Hong Kong were not sub- stantial in nature when compared to the fabrication of the parts used in those operations. Respondent's argument misses the mark. Section 1.954-3(a)(4)(iii), Income Tax Regs., requires a deter- mination of whether "the operations conducted by the selling corporation in connection with the property purchased and sold are substantial in nature". Under those regulations, we examine the distinct operations conducted by the CFC with respect to the purchased property to determine if those operations, standing alone and without regard to the operations conducted by thePage: Previous 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 Next
Last modified: May 25, 2011