- 44 -
violating Congress’s “intent of harmony between the two Code
sections.” Respondent is presumably focusing on the language of
the Senate report that “in order to more accurately reflect
income and make the income tax system more neutral, a single,
comprehensive set of rules should govern the capitalization of
costs of producing, acquiring, and holding property”. S. Rept.
99-313, supra at 140, 1986-3 C.B. (Vol. 3) at 140. This argument
is unpersuasive. As found above, the rules for the first level
allocations under both sections 1.263A-1(e)(3)(i) and 1.451-
3(d)(6)(ii), Income Tax Regs., are identical, requiring only that
a “reasonable allocation” be made. The two sections can be
applied simultaneously and will end with the same result under
the first level allocation, regardless of which section the
taxpayer focuses on.
Accordingly, we find that the legislative history does not
support incorporating the reasonableness standard of section
1.263A-1(f)(4), Income Tax Regs., into the first level
allocations under sections 1.263A-1(e)(3)(i) and 1.451-
3(d)(6)(ii), Income Tax Regs.
D. The Ordinary Meaning of Reasonable
Where a term is not defined in a statute, it should be given
its ordinary meaning. Crane v. Commissioner, 331 U.S. 1, 6
(1947); Keene v. Commissioner, 121 T.C. 8, 14 (2003); De Cou v.
Commissioner, 103 T.C. 80, 87 (1994); Goodson-Todman Enters.,
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