Electronic Arts, Inc. and Subsidiaries - Page 68




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          provisions in order to determine whether we can conclude that               
          petitioners are entitled to summary judgment on the matter before           
          us.                                                                         
               a.  Legislative History--Sec. 936(h)                                   
               Subsection (h) was added to section 936 by section 213(a)(2)           
          of the Tax Equity and Fiscal Responsibility  Act of 1982                    
          (hereinafter sometimes referred to as TEFRA 82), Pub. L. 97-248,            
          96 Stat. 324, 452.  The bill (H.R. 4961) as passed by the House             
          of Representatives did not have a provision corresponding to                
          subsection (h).  H. Conf. Rept. 97-760, at 504 (1982), 1982-2               


               14(...continued)                                                       
          as a result that these activities amounted to production within             
          the meaning of sec. 993(c)(1)(A).  In each of these cases it                
          appears that all the relevant work was done directly by employees           
          of the company whose qualifications were in dispute.  The                   
          question before the Court in each of those cases was whether                
          there was manufacturing or producing.  In the instant cases,                
          respondent states on answering brief: “Respondent does not                  
          dispute that there was manufacturing.  The issue is, rather, who            
          did the manufacturing.”  We do not believe that either Dave                 
          Fischbein Manufacturing Co. or Webb Export Co. is helpful in                
          deciding whether EAPR manufactured or produced the video games              
          here in dispute; neither side cites either of those opinions.               
          Both sides cite Bausch & Lomb, Inc. v. Commissioner, T.C. Memo.             
          1996-57.  We conclude that that opinion is not helpful in                   
          resolving the issue presented in the instant cases for the same             
          reason that Dave Fischbein Manufacturing Co. and Webb Export Co.            
          are not helpful--they focus on whether there was manufacturing or           
          production, not on whether the subject corporation could properly           
          be considered to be responsible for the manufacturing or                    
          production.                                                                 
               A recent review of some of the materials in this area does             
          not deal with the significance of (1) variations in statutory               
          language and (2) the analysis in Spalding v. Commissioner, 66               
          T.C. 1017 (1976).  Levine et al., “Assessing the Manufacturing              
          Exception to Subpart F Through Contract Manufacturing                       
          Arrangements”, 1 Taxation of Global Transactions 37 (2001).                 




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