Anschutz Company and Subsidiaries - Page 6

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               “incurred by reason of” prong.  The Court did not                      
               address the “directly benefits” prong as required by                   
               the regulatory test.  Qwest’s Common Indirect Costs                    
               plainly meet the “directly benefits” prong and should                  
               have been allocated to Qwest’s section 263A retained                   
          Before the motion, respondent never argued that the section 263A            
          regulations provided for a “direct benefits” test.5  Respondent’s           
          motion for reconsideration is not the appropriate forum to raise            
          a new legal theory and can be denied on that basis alone.  See              
          id.  Nevertheless, to explain why we conclude that respondent               
          misconstrues the regulations under section 263A and ignores the             
          regulations under section 460, we shall address respondent’s new            
               At issue in Anschutz I was Qwest’s allocation of indirect              
          costs, incurred when installing conduit or when pulling fiber,              
          between its retained assets and its long-term customer contracts.           
          Section 263A governed the cost allocations to its retained                  
          assets, while section 460 governed the cost allocations to its              
          long-term customer contracts.6  We found that the regulations               
          under each section provided for two levels of allocation of                 
          indirect costs, and only the first-level allocations were at                

               5  In his answering brief, respondent analyzed Qwest’s                 
          incremental cost allocation method under both the clear                     
          reflection of income standard and under the “reasonable                     
          allocation” test.  The Court addressed both in Anschutz I.                  
               6  See Anschutz I for a detailed description of each                   
          Internal Revenue Code section.                                              

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