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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
7(...continued)
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.
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