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patterned after the regulations under section 451, taking a
“similarly liberal approach”. See S. Rept. 99-313, supra at 141,
1986-3 C.B. (Vol. 3) at 141; H. Rept. 99-426, supra at 626, 1986-
3 C.B. (Vol. 2) at 626. Respondent argues that consequently, the
definitions of section 1.263A-1(f)(4), Income Tax Regs., “and the
principles of its detailed guidance for the allocation of costs
should govern * * * the interpretation of ‘reasonable method’
under the section 451 regulations.” We interpret the legislative
history differently.
The Senate report does not state that the regulations under
sections 263A and 451 should be identical. Nor does the Senate
report state that the same rules should apply to allocations
under the two sections. The Senate report provides only that the
uniform capitalization rules be “patterned” after the section 451
regulations, and it explicitly acknowledges that changes may be
needed “in order to adapt such rules to production not involving
a [long-term] contract”. The Senate report suggests that
Congress knew differences existed between allocations under
sections 263A and 451, and thus different rules would be
required.
Respondent further contends that, by not incorporating the
reasonableness standard of the section 263A regulations into the
section 451 regulations, the “choice” of which Code section to
apply first “will lead to radically different results,” thus
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