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the possession product is a component product. In evaluating the
regulations under section 936, we are mindful of the Supreme
Court's admonition: "The choice among reasonable interpretations
is for the Commissioner, not the courts." National Muffler
Dealers Association, Inc. v. United States, 440 U.S. 472, 488
(1979). Provided that Q&A-12 is neither unreasonable nor plainly
inconsistent with the statute, it will be upheld. Bingler v.
Johnson, 394 U.S. 741, 750 (1969); RJR Nabisco, Inc. v. United
States, 955 F.2d at 1464.
The legislative history of section 936, as a whole, is
silent on the precise issue before us. The legislative history
does, however, make clear Congress' consistent intention to
maintain the favorable tax benefit of operating in a U.S.
possession, and we find that the application of the PCR in Q&A-12
in the instant case is fully consistent with that intention.
The regulatory scheme under section 936 is technical and
complex, and we find that the Commissioner considered the
treatment of possession products in a detailed and reasoned
fashion before making a final decision.9 Section 936 does not
specifically define the term “CTI”, nor does the statute provide
a clear method for allocating and apportioning expenditures in
9As is customary, the IRS invited interested members of the
public to submit written comments with respect to proposed
regulations interpreting sec. 936 as amended by the Tax Equity
and Fiscal Responsibility Act of 1982. Numerous comments were
received and considered. See 47 Fed. Reg. 53746 (Nov. 29, 1982).
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