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Section 1.263A-1(e)(3)(i), Income Tax Regs., does not
provide for a “directly benefits” test or an “incurred by reason
of” test, of the kind suggested by respondent. Instead, as found
in Anschutz I and as indicated by the above-emphasized language,
sections 1.263A-1(e)(3)(i) and 1.451-3(d)(6)(ii), Income Tax
Regs., provide a “reasonable allocation” test for a taxpayer’s
allocation of indirect costs among taxpayer-produced property,
long-term contracts, and other activities. The “reasonable
allocation” test was the focus of the Court’s analysis in
Anschutz I. Using the appropriate test, we found that Qwest’s
incremental cost allocation method was a reasonable cost
allocation method under sections 1.263A-1(e)(3)(i) and 1.451-
3(d)(6)(ii), Income Tax Regs. For these reasons, respondent’s
allegation that the Court improperly focused on the “incurred by
reason of” test while ignoring the “directly benefits” test is
without support.
Respondent has failed to demonstrate unusual circumstances
or substantial errors of fact or law. Respondent seeks only to
assert a new legal theory, which we find unpersuasive.
Accordingly, we will deny respondent’s motion for
reconsideration.
We have considered all arguments and contentions made, and,
to the extent not mentioned, we conclude that they are moot,
irrelevant, or without merit.
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Last modified: May 25, 2011