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the choice made was a reasonable choice within a gap left open by
Congress.
Q&A-12 contains no mention of "factual relationships" or
"economic consequences". It merely provides a formula used in
calculating CTI in order to determine the amount of credit under
section 936. There is no doubt and no dispute that (1)
petitioner qualifies for the section 936 credit, and (2) CRI made
a valid election to use the profit-split method under section
936.
Currently, in response to the instant case, the Commissioner
has opened a new regulation project regarding the computation of
CTI under section 936(h). The proposed regulation contains,
again, a formulary rather than a factual approach attacking the
issue from the income side as opposed to the expense side. The
proposed regulation makes no mention of factual relationships or
economic reality.
We find that Q&A-12 is clear on its face, and respondent's
strained interpretation of the relationship between Q&A-1 and
Q&A-12 is merely an attempt to persuade this Court to
retroactively revise the regulation. Until the regulation is
changed, reflecting the Commissioner's proposed amendments to
Q&A-12, taxpayers are entitled to the tax benefit generated under
Q&A-12.
Additionally, we find that the formulaic method prescribed
in Q&A-12 is consistent with Congress' intent to encourage
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