- 92 -
by B&L Ireland and B&L Hong Kong were generally considered manu-
facturing in determining whether those operations were generally
considered to constitute the manufacture of sunglasses.
Based on our examination of the entire record before us, we
find that the sunglass assembly operations conducted by B&L
Ireland and by B&L Hong Kong with respect to the sunglass parts
purchased by those companies were generally considered to consti-
tute the manufacture or production of sunglasses for purposes of
section 954(d)(1) and section 1.954-3(a)(4)(iii), Income Tax
Regs.
Were the Assembly Operations at
Issue Limited to Minor Assembly?
Respondent directs the Court's attention to the third
sentence of section 1.954-3(a)(4)(iii), Income Tax Regs. That
sentence provides: "In no event, however, will packaging, re-
packaging, labeling, or minor assembly operations constitute the
manufacture, production, or construction of property for purposes
of section 954(d)(1)." Based on that sentence, respondent con-
tends, inter alia, that even if the sunglass assembly operations
conducted by B&L Ireland and by B&L Hong Kong were substantial in
nature and were generally considered to constitute the manufac-
ture of sunglasses so that such operations satisfied the facts
and the circumstances test of section 1.954-3(a)(4)(iii), Income
Tax Regs., those operations were limited to "packaging, repackag-
Page: Previous 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 NextLast modified: May 25, 2011