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respondent’s thesis, that regulations under section 936 must
control because the credit that petitioners claim is a credit
under section 936. However, we are not aware of, and petitioners
have not directed our attention to, any requirement that a
regulation cannot effectively control a determination under
section 954 unless it is a regulation under section 954. Section
7805(a), the basic regulation-prescribing authority for the
Treasury Department does not impose such a restriction.
Accordingly, we reject petitioners’ thesis, that we follow
regulations numbered 1.954 and ignore regulations numbered 1.936.
Instead, we conclude that both section 1.936-5(b)(6), Q&A-1,
Income Tax Regs., and section 1.954-3(a)(4), Income Tax Regs.,
are authoritative interpretations of the statute and guide us in
the instant cases in ruling on EAPR’s eligibility to use the
profit split method of section 936(h)(5)(C)(ii), by determining
whether or not the video games were manufactured or produced in
Puerto Rico by EAPR “within the meaning of (d)(1)(A) of section
954.” To the extent possible, we should harmonize the foregoing
regulations. See, e.g., Bencivenga v. Western Pa. Teamsters, 763
F.2d 574, 579 (3d Cir. 1985), where the Court of Appeals
“conclude[d] that in this instance the language of [Treasury]
Regulation 1.411(d)-3(b) is not in fact inconsistent with
Regulation 1.411(a)-7(a)(1)(ii).” We reach the same conclusion
with regard to the regulations before us.
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