Cite as: 537 U. S. 437 (2003)
Opinion of the Court
portioned, thereto, and (b) a ratable part of any other expenses, losses, or other deductions which are not definitely related to a class of gross income, determined in a manner consistent with the rules set forth in § 1.861-8." § 1.994-1(c)(6)(iii) (emphasis added).
Boeing interprets the emphasized words as prohibiting a ratable allocation of R&D expenditures that can be "definitely related" to particular export sales. The obvious response to this argument is provided by the final words in the paragraph. Whether such an expense can be "definitely related" is determined by the rules set forth in the very regulation that Boeing challenges, § 1.861-8. Moreover, it seems quite clear that the Secretary could reasonably determine that expenditures on 767 research conducted in years before any 767's were sold were not "definitely related" to any sales, but should be treated as an indirect cost of producing the gross income derived from the sale of all planes in the transportation equipment category.
Boeing also argues that the regulations expressly allow it to allocate and apportion R&D expenses to groups of export sales that are based on industry usage rather than SIC categories. The regulations providing the strongest support for this argument are §§ 1.994-1(c)(7)(i) and (ii)(a), which control the grouping of transactions for the purpose of determining the transfer price of sales of export property, and § 1.994- 1(c)(6)(iv), which governs the grouping of receipts when the CTI method of transfer pricing is used.13 Treasury Regulation § 1.994-1(c)(7) reads, in part, as follows:
13 In support of its argument that §§ 1.994-1(c) and 1.861-8(e)(3) conflict, Boeing also points to various proposed regulations, including example 1 of proposed regulation § 1.861-8(g). See Brief for Petitioners in No. 01- 1209, pp. 22-26. Unlike Boeing and the dissent, see post, at 458-459 (opinion of Thomas, J.), we find these proposed regulations to be of little consequence given that they were nothing more than mere proposals. In 1972—when regulations governing DISCs were first proposed—the Secre-
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