General Dynamics Corporation and Subsidiaries - Page 22

                                       - 22 -                                         
          Respondent's litigating position is not afforded any more                   
          deference than that of petitioners.  By way of example, proposed            
          regulations and revenue rulings are generally not afforded any              
          more weight than that of a position advanced by the Commissioner            
          on brief.   Laglia v. Commissioner, 88 T.C. 894, 897 (1987);                
          Estate of Lang v. Commissioner, 64 T.C. 404, 407 (1975), affd. in           
          part and revd. in part 613 F.2d 770 (9th Cir. 1980).  That is               
          especially so here, where respondent did not publish her position           
          prior to this controversy.  Accordingly, we proceed to decide               
          which party's approach harmonizes with the statutory intent.                
               Section 994(a)(2) presents the somewhat ambiguous and                  
          completely undefined term "combined taxable income."  The                   
          regulation in question does not conflict with the language of the           
          statute it interprets.  In addition, the regulatory definition of           
          costs related to export sales is consistent with legislative                
          history, which states:                                                      
               the combined taxable income * * * would be determined                  
               by deducting from the DISC's gross receipts the related                
               person's cost of goods sold with respect to the                        
               property, the selling, overhead and administrative                     
               expenses of both the DISC and the related person which                 

          Subdivision (iii) of sec. 1.994-1(c)(6), Income Tax Regs.,                  
          applies equally to buy-sell DISC’s and commission DISC’s.                   
               Accordingly, portions of the regulation in question may be             
          legislative or interpretative or a mix of legislative and                   
          interpretative elements.  The parties’ disagreement, however,               
          does not focus on the source of the Government's authority for              
          issuance of the regulation in question, and it is unnecessary to            
          decide whether the regulation in question is interpretative,                
          legislative, or a mixture of both.                                          

Page:  Previous  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  Next

Last modified: May 25, 2011