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generate qualified export receipts the export property
must be used in foreign commerce prior to 1 year after
its sale. For reasons beyond P's control the vessels
were not so used. P contends that the regulation is
not a proper interpretation of the statutory provision.
Held: Sec. 1.994-1(c)(6), Income Tax Regs.,
interpreted to require P to reduce gross export
receipts by related period costs even though P is
permitted to elect to deduct those costs in years prior
to the combined taxable income computation.
Held, further, P's vessels are not qualified
export property because they fail to meet the
requirements of sec. 1.993-3(d)(2)(i)(b), Income Tax
Regs. Sim-Air, USA, Ltd. v. Commissioner, 98 T.C. 187,
190-197 (1992), followed in upholding the validity of
the regulation.
David C. Bohan, Richard T. Franch, James M. Lynch, Philip A.
Stoffregen, David D. Baier, Scott Schaner, Gregory S.
Gallopoulos, and Debbie L. Berman, for petitioner in docket No.
19202-94.
David C. Bohan, James M. Lynch, Philip A. Stoffregen, and
David D. Baier, for petitioner in docket No. 19203-94.
William H. Quealy, Jr., Alice M. Harbutte, Jeffrey A.
Hatfield, Thomas C. Pliske, and William T. Derick, for
respondent.
GERBER, Judge: General Dynamics Corp. and its consolidated
subsidiaries (GENDYN) (docket No. 19202-94) and its foreign sales
corporation, General Dynamics Foreign Sales Corp. (GENDYN/FSC)
(docket No. 19203-94), are petitioners in these consolidated
cases. Respondent determined corporate income tax deficiencies
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