Electronic Arts, Inc. and Subsidiaries - Page 65




                                       - 65 -                                         
               (a)  manufactured,                                                     
               (b)  in Puerto Rico,                                                   
               (c)  by EAPR,                                                          
          and that this have been done “within the meaning of subsection              
          (d)(1)(A) of section 954.”                                                  
               Ordinarily, if we do not have a clear authoritative                    
          interpretation of this language in section 936(h)(5)(B)(ii)                 
          (final flush), then we would examine other Code provisions that             
          use the same language and treat interpretations of any such Code            
          provisions as authoritative, or at least highly persuasive,                 
          definitions of this language.  See, e.g., supra note 9 and                  
          accompanying text, and our analysis of the meaning of “active               
          conduct of a trade or business”.  However, we have held that the            
          terms “manufactured” and “produced” are not to be so analyzed.              
               In Spalding v. Commissioner, 66 T.C. 1017 (1976), the                  
          taxpayers constructed an 8-foot chain link fence around that                
          portion of their auto wrecking yard in which their employees                
          dismantled autos and stored salvaged parts.  Id. at 1019.  The              
          issue before us was whether this fence qualified for the                    
          investment credit.  Id.  In order to resolve this issue we had to           
          decide whether the taxpayers’ activity constituted                          
          “manufacturing” or “production” within the meaning of section               
          48(a)(1)(B)(i), I.R.C. 1954.  We opined that the taxpayers’                 
          activity apparently would not constitute manufacturing or                   
          production under section 954(d)(1)(A) but would under section               




Page:  Previous  55  56  57  58  59  60  61  62  63  64  65  66  67  68  69  70  71  72  73  74  Next

Last modified: May 25, 2011