608 F.2d 462 | Ct. Cl. | 1979
delivered the opinion of the court:
This case comes before us, pursuant to Rule 134(b) of this court, on the parties’ stipulated facts, and after oral argument. The controversy arises in the context of subchapter N of chapter 1 of the Internal Revenue Code of 1954 (code). Plaintiffs, who elected to file a consolidated federal income tax return for the calendar year 1962, pursuant to sections 1501 et seq. of the code, also elected to claim a foreign tax credit against United States income tax pursuant to sections 901 and 902 of the code, subject to the overall limitation on the foreign tax credit provided by section 904(a)(2) of the code in effect during the calendar year 1962. That overall limitation is in the form of a fraction, the numerator of which is taxable income from sources without the United States and the denominator of which is the entire ("worldwide”) taxable income for the same taxable year. There is no dispute between the parties as to the proper computation of the denominator. This court has been asked to determine the proper computation of the numerator in the limiting fraction of the foreign tax credit.
In order to compute the "taxable income from sources without the United States” (foreign source taxable income), used as the numerator, foreign source gross income may be reduced not only by expenses, losses, or other deductions which can definitely be allocated to foreign source gross income, it may also, pursuant to section 863
I.
Plaintiff, International Telephone and Telegraph Corporation (ITT), is the common parent of an affiliated group of corporations as defined in section 1504(a) of the Internal Revenue Code of 1954.
Treasury Reg. § 1.1502-43A(c)(2), as effective in 1962, allowed an affiliated group filing a consolidated tax return the privilege, available to nonaffiliated taxpayers, of electing, subject to limitation, a credit for foreign taxes paid. That regulation states in part:
* * * The credit allowable * * * shall not exceed an amount which bears the same ratio to the total tax of the affiliated group against which the credit is taken as the consolidated taxable income of the group * * * from sources without the United States * * * bears to the entire consolidated taxable income. * * *
Therefore, the tax credit allowable is computed as follows:
The limitation on the extent of this credit is restricted by section 904(a) of the code in a manner which assures that the credit will be no more than the total United States tax against which the credit is taken.
The dispute between the parties arises over the calculation of the consolidated foreign source taxable income of the affiliated group. The consolidated income subject to taxation depends on the method of apportioning these "not
This computation produces the amount of the foreign source "not definitely allocable” expenses, which amount is the ratable part which may be deducted, along with specifically allocated foreign source deductions, from the group’s total of foreign source gross income. The excess is the consolidated foreign source taxable income.
Defendant argues that the apportionment of not definitely allocable expenses and the computation of consolidated foreign source taxable income is effected by separately determining each constituent member’s specified and ratable foreign source gross income and deductions. The Government contends that each member’s foreign source taxable income, so determined, should then be added together to determine the consolidated foreign source taxable income of the group.
Plaintiffs have filed a timely claim for refund, with interest and costs as allowed by law, of taxes of $1,695,455.63, paid as a result of the Internal Revenue Commissioner’s use of the method contended for by defendant.
II.
Before we display the unknotted short pieces which we have patiently picked, one by one, from this tangled mass, a basic explanation of foreign tax credits and consolidated tax returns is in order. Section 901 of the code is entitled "Taxes of Foreign Countries and of Possessions of United States.” It reads as follows:
(a) Allowance of Credit. — If the taxpayer chooses to have the benefits of this subpart, the tax imposed by this*449 chapter shall, subject to the applicable limitation of section 904, be credited with the amounts provided in the applicable paragraph of subsection (b) plus, in the case of a corporation, the taxes deemed to have been paid under sections 902 and 960. Such choice for any taxable year may be made or changed at any time before the expiration of the period prescribed for making a claim for credit or refund of the tax imposed by this chapter for such taxable year, The credit shall not be allowed against the tax imposed by section 531 (relating to the tax on accumulated earnings), against the additional tax imposed for the taxable year under section 1333 (relating to war loss recoveries), or against the personal holding company tax imposed by section 541.
(b) Amount Allowed. — Subject to the applicable limitation of section 904, the following amounts shall be allowed as the credit under subsection (a):
(1) Citizens and Domestic Corporations. — In the case of a citizen of the United States and of a domestic corporation, the amount of any income, war profits, and excess profits taxes paid or accrued during the taxable year to any foreign country or to any possession of the United States; * * *
As referenced in section 901, section 904(a) places a limitation on the amount of the credit. The limitation in section 904(a)(2), elected by plaintiffs, requires use of a fractional numerator and denominator, the relation between which has significant parallels. The alternative limitations are as follows:
SEC. 904. LIMITATION ON CREDIT.
(a) Alternative Limitations.—
(1) per-country limitation. — In the case of any taxpayer who does not elect the limitation provided by paragraph (2), the amount of the credit in respect of the tax paid or accrued to any foreign country or possession of the United States shall not exceed the same proportion of the tax against which such credit is taken which the taxpayer’s taxable income from sources within such country or possession (but not in excess of the taxpayer’s entire taxable income) bears to his entire taxable income for the same taxable year.
(2) overall limitation. — In the case of any taxpayer who elects the limitation provided by this paragraph, the total amount of the credit in respect of taxes paid or accrued to all foreign countries and possessions of the United States shall not exceed the same proportion*450 of the tax against which such credit is taken which the taxpayer’s taxable income from sources without the United States Glut not in excess of the taxpayer’s entire taxable income) bears to his entire taxable income for the same taxable year.
As will be seen, the difference between these two paragraphs of section 904(a) has consequences significant to the outcome of this dispute.
The Foreign Tax Credit, by Elizabeth A. Owens,
The per-country limitation as stated in section 904(a)(1) is the standard limitation used by most corporations. In fact, for the years 1954-60 it was the only limitation allowed under United States law.
D. Elimination of the overall limitation on credit (sec. 904)
The credit which is now allowed for foreign taxes is subject to two limitations. The per country limitation restricts the foreign tax which may be claimed as a credit to an amount bearing the same proportion to the taxpayer’s total tax liability as the income from the foreign country bears to the total income of the taxpayer. The overall limitation applies a similar formula with respect to the aggregate foreign taxes allowed as a credit. As a practical matter, however, the overall limitation is operative only when a taxpayer earns income in one foreign country and incurs a loss in another. The effect of the limitation is unfortunate because it discourages a company operating profitably in one foreign country from going into another country where it may expect to operate at a loss for a few years. Consequently your committee has removed the overall limitation.
The elimination of the overall limitation was in effect until December 31,1960, when Pub. L. No. 86-780, 74 Stat. 1010,
As Professor Owens stated: "[t]he [per-country] limitation is computed by multiplying the United States tax (before credit for any taxes) against which the credit is claimed by a fraction, the numerator of which is taxable income from sources within the foreign country and the denominator of which is total taxable income from all sources, both foreign and domestic.”
Owens explains the overall limitation by stating that "[t]he amount of the over-all limitation is the amount of the United States tax on aggregate foreign source income. It is computed by multiplying the United States tax (before credit for any taxes) against which credit is claimed by a fraction, the numerator of which is taxable income from sources without the United States and the denominator of which is total taxable income from all sources, both foreign and domestic.”
III.
An understanding of consolidated tax returns and the regulation of their use is also important in determining the issues presented. In fact, the relationship between the consolidated tax return regulations and the foreign tax regulations determines the outcome of this dispute.
The first use of consolidated tax returns for a group of corporations was initially authorized by Treas. Reg. 41, art. 78 (1917 ed.).
Congress recognized this "unit” theory as furthering an "equitable and convenient way of dealing with such a situation” (consolidated returns). Thus, consolidated returns were intended "to circumvent intercompany dealing and accounting practices * * * through which * * * net income of a corporation in a group under common control might be artificially increased or diminished * * * with the attendant effect on the taxes upon such company if separately assessed.”
Gould Coupler Co. is not an isolated case. The adoption of the "economic unit” theory of consolidated returns is well established in case law.
Although plaintiffs have conceded the issue they raised with respect to inclusion of losses in the computation, it is nevertheless important to advert to the treatment of losses as part of the questions involved. In determining the sections 901 and 902 foreign tax credit of a consolidated group, losses sustained by members of the affiliated group affect drastically the outcome of the computation determining the limiting fraction in the sections 901 and 902 tax credit. It was to taxpayers’ advantage to exclude the losses, for the overall limitation imposed by the section 904(a)(2) limitation allows the averaging of foreign tax rates. Unlike the averaging of tax rates of foreign countries over several periods of time (per country with carryback), the rates in all countries where foreign taxes are paid are averaged in one taxable year. A loss here would lessen the amount of credit which may be taken since a foreign tax credit is computed on the basis of net taxable income.
Also, losses affect the operation of the consolidated tax return regulations, as stated in Gould Coupler Co.:
* * * [I]n an affiliation, if the operating deficits were not offset against earned surplus, the consolidated invested capital could be inflated by building up an artificial earned surplus in one member at the expense of others whose invested capital would not be correspondingly reduced. * * * [5 B.T.A. at 517.]
Therefore, operating losses sustained by any member of the group are included in arriving at the consolidated net income. This netting is required since "losses of members of the affiliated group * * * should be offset against income of other members of the group in the same manner that losses on one branch of a single corporation’s business may be offset against income from another branch * * *.”
V
The imprecise terms used in the attempt to regulate the foreign tax credit are a source of confusion. This confusion has resulted in incorrect assumptions that have made the task of plaintiffs and defendant, as well as the court, very difficult. The defendant asserts that the argument adopted here by plaintiffs ignores the consolidated return regulations in that plaintiffs’ computation attempts to treat the affiliated group as one.
The consolidated return regulations are and always have been a means for the practical enforcement of a legal fiction, namely, that certain groups of corporations are, for purposes of United States income tax, one taxpayer.
Defendant further contends that G.C.M. 6640, VIII-2 C.B. 212 (1929), supports this reasoning. We reject this, as
Treasury Reg. § 1.1502-31A, a consolidated return regulation, provides general rules for the computation of tax liability, but computation of the foreign tax credit requires reference to the specific rules contained in Treas. Reg. § 1.1502-43A, which is also a consolidated return regulation. Treasury Reg. § 1.1502-31A might be controlling if there were no section 1.1502-43A. As indicated supra, it is the tentative United States tax against which the section 904(a) limiting fraction of the foreign tax credit is applied.
This failure of a part of defendant’s argument does not, however, resolve the problem of calculating the foreign tax credit. That resolution requires us to proceed with an inquiry into the alleged conflict between Treas. Reg. §§ 1.1502-31A and 1.1502-43A. Although both are "consolidated return regulations,” being promulgated pursuant to a consolidated return provision of the code, they have different basic purposes. At the outset, we observe that
First, we must observe the distinction between a foreign tax credit and a foreign tax deduction.
* * * From the items of gross income specified in subsection (a) there shall be deducted the expenses, losses, and other deductions properly apportioned or allocated thereto, and a ratable part of any expenses, losses, or other deductions which cannot definitely be allocated to some item or class of gross income. The remainder, if any, shall be treated in full as taxable income from sources without the United States. [Emphasis supplied.]
Therefore, when dealing with the foreign tax credit, the ratable, apportionment of not definitely allocable deductions must be made before it is possible to determine the group’s consolidated taxable income.
The parties stipulated the manner in which the revenue agents computed the ITT group’s foreign tax credit. Taking
Step one and two of the Government’s calculation are interrelated and thus will be analyzed together:
In analyzing these "actions,” the phrase "not definitely allocable” expenses must be clearly understood. "Not definitely allocable” expenses are those that are not assignable to either a specific domestic or foreign income source.
Otherwise stated, the overall limitation involved in this case demands that the taxable incomes of all the foreign members of the affiliated group be aggregated to determine the numerator and that the denominator is to be the worldwide taxable income of the affiliated group. Only when the entire taxable incomes of all foreign corporations in the group are aggregated first to determine the numerator, and the entire worldwide taxable incomes of all corporations in the group are aggregated to determine the denominator, can the proper fraction be found from which one can ascertain the not definitely allocable expenses that must be deducted from foreign source gross income.
Defendant "apportioned the 'not definitely allocable’ expenses of each member of the ITT Group pursuant to separate fractions for each member of the ITT Group * * *.”
Continuing the steps in defendant’s computations:
These subsequent actions too must fall as error. In subtracting from each member’s foreign source gross income a proportionate share of the not definitely allocable expenses, the action of "defendant’s agents” effected a distortion of the numerator of the foreign tax credit limitation. Secondly, defendant required the ITT group to
VI.
There is little authority to guide us in determining what effect consolidated tax return regulations have on the computation of the foreign tax credit.
The Government in advocating its analysis of Treas. Reg. § 1.1502-31A is correct in asserting that the section 904(a) limiting fraction, as computed by plaintiffs, is deficient in that it does not include losses. Yet defendant’s second assertion that "liability” is all that is determined by Treas. Reg. § 1.1502-43A is incorrect. If defendant’s second assertion were upheld it would obliterate the distinction between the per-country limitation and the overall limitation.
One of the reasons for amending the Code * * * was to give to taxpayers operating in branch form one of the advantages already available to those operating through subsidiaries, that is, the advantage of averaging foreign tax rates over time. * * *
As is now obvious, plaintiffs’ repudiation of defendant’s reliance upon Treas. Reg. § 1.1502-31A (that consolidated return regulation setting forth the rules for determination of the consolidated tax liability generally) is integral to plaintiffs’ case. Plaintiffs insist that the affiliated group is one taxpayer and must be considered as such under plaintiffs’ "unitary theory.” Defendant admits that the unitary theory of consolidated tax returns was the correct approach prior to 1934. Defendant’s claim that this approach was destroyed as of 1934 is unsubstantiated. In 1942 Congress enacted a law which once again allowed affiliated groups to file consolidated tax returns.
If, in fact, Treas. Reg. 89, art. 43, had remained intact until 1962, that continuation would have supported the "sum of separate company” computation, as advocated by the defendant. This was not the case. When some consolidated tax returns were again allowed in 1939, the "sum of separate company” computation was still required. In the beginning of 1942, Treas. Reg. 104, § 23.43, was still in effect. Its existence supports the steps used by defendant, but only in the context of that time. Treasury Decision 5127, 1942-1 C.B. 117, changed this. Section 23.43 of the regulations, which earlier had been article 43 of Treas. Reg. 89, was amended. That regulation was amended in part (b) to state that the credit allowed to the affiliated
This language, treating the affiliated group as a single taxpayer, is directly out of the early Board of Tax Appeals cases. Defendant contends here that after the 1934 abolishment of consolidated tax returns, the meaning or significance of this concept changed during the 1934-42 absence of practically all consolidated tax returns. Yet, the House Committee on Ways and Means used this language again in addressing the credit for foreign taxes in its consideration of the proposed 1954 Internal Revenue Code, making specific reference to section 23.43 of Treas. Reg. 129.
Treasury Reg. §§ 1.1502-43A and 1.1502-31A together, not merely the definitions in the latter, determine the rights and obligations of an affiliated group when filing a consolidated tax return and also electing a foreign tax credit. The Owensboro Conserve case, supra note 22, points up the goal of uniformity of treatment that should be applied to both a single corporation with foreign branches and an affiliated group with foreign subsidiaries. The board there spoke to the issues of affiliated groups, losses, and the treatment of a subsidiary for purposes of United States income taxes. As stated by the Board of Tax Appeals, "[t]he
For accounting purposes, Treas. Reg. § 1.1502-31A sets guidelines for consolidated groups in preparing their consolidated tax returns, in order to facilitate audit of the operations of the manifold enterprise. This regulation, however, does not provide the calculation involved in computing a foreign tax credit. These provisions of the regulations truly are "intercompany accounting measures” as plaintiffs here assert. In G.C.M. 6640, VIII-2 C.B. 212 (1929), the Treasury in fact faced the issue of the consolidated tax return and its effect on the foreign tax credit.
Treasury Reg. § 1.1502-31A has its own place as a charter of intercompany accounting measures. It provides a manner or form of accounting. The Senate Committee on Finance in its report
* * * [A] corporation filing a consolidated return is required to prepare and file such statements and schedules in columnar form to the end that the details of the items of gross income and deductions for each corporation included in the consolidation may be readily audited.60
Treasury Reg. § 1.1502-31A thus has an application when reporting the computation of foreign tax credits. It
In summary, when dealing with the overall foreign tax credit limitation, the computation is not the same. All foreign members of the affiliated group determine their taxable incomes for the purpose of the "tentative” tax in the manner prescribed by the accounting provisions in Treas. Reg. § 1.1502-31A. The foreign members then add together their taxable incomes, the total of which is used as the numerator of the section 904(a)(2) limiting fraction. The worldwide taxable income of the whole group, both domestic and foreign, constitutes the denominator. This fraction, once reduced, is multiplied by the United States tax (before the credit for any taxes), and this produces the maximum amount available for the consolidated group’s credit for foreign tax, even if the group as a whole paid, worldwide, more foreign taxes than this amount. The
The section 904(a)(2) limiting fraction, computed in this manner, determines the proportion that foreign source income has to worldwide source income. It is this relationship that section 862 of the Internal Revenue Code of 1954 depends upon to determine how much of the "not definitely allocable” expenses are to be considered foreign and how much of these "expenses” are to be considered domestic, in effect resulting in double taxation to some extent. The plaintiffs followed this approach.
As we have said, the regulations supposedly in conflict are truly not. Regulations, their relationship to each other, and the extent of their authority, are affected by the method of their promulgation. Consolidated return regulations are "legislative” in character and have the force and effect of law.
In the present case, Treas. Reg. § 1.1502-31A fulfills these requirements, but the interpretation adopted by the Government of this regulation does not. Treasury Reg. § 1.1502-31A, in the context that defendant urges here, is misapplied. Whether a certain phrase or word has the same meaning in two different parts of the code depends on the context in which they are used, and the intent behind their use.
The consolidated return regulations were intended to prevent tax evasion and fraudulent manipulation of figures when completing a consolidated tax return. This legislative intent is served when Treas. Reg. § 1.1502-43A is applied in the manner in which it was applied by plaintiffs, to determine the credit which was reported in accordance with Treas. Reg. § 1.1502-31A.
In summary, we find that the method of computation advocated by plaintiffs, after withdrawing Count II of the petition, is the correct approach, and that the method used by defendant is erroneous. Accordingly, judgment is entered in favor of plaintiffs, with interest as provided by law, and the case is remanded to the trial division for proceedings under Rule 131(c) to determine the amount of recovery.
Treas. Reg. § 1.861-8, restating I.R.C. § 861, in actuality determines the ratable portion of nonallocable expenses allowed in the foreign tax credit. Yet the § 1.861-8 computation is interrelated with regulations § 1.862 and § 1.863. Sections 861, 862, and 863 of the code contain provisions for determining sources of expenses as well as of income. The parties do not disagree as to the amount of the group’s total foreign source gross income, the amount of the expenses properly attributable to specified items of foreign source gross income, or to the total amount of the not definitely allocable expenses. The dispute is as to the proper method of apportioning this latter amount of expenses so that the two portions arrived at may each be deducted from foreign source gross income or from domestic source gross income, as appropriate.
Plaintiffs rely primarily on Treas. Reg. § 1.1502-43A as the basis upon which this limiting fraction should be calculated. Defendant does not deny the applicability of this regulation, but asserts that the definition of "consolidated taxable income” contained in Treas. Reg. § 1.1502-31A controls the computation of the elements of the foreign tax credit limiting fraction.
All code references are to the Internal Revenue Code of 1954 as appearing in 26 U.S.C. (1964).
Plaintiffs, not having previously elected the other alternative, were not precluded from making this election.
This amount appears to include the tax shown on the return as filed in the amount of $52,121.96. If so, this will be taken into account in determining the amount of plaintiffs’ recovery.
Published by The Law School of Harvard University, 1961 (hereinafter cited as Owens).
Owens at 5 & n.6.
[1954] U.S. Code Cong. & Ad. News 4103.
Owens at 6.
Id. Elaboration on limitation imposed on this particular credit can be found in Owens at 6-7.
Owens at 8. The above might be better expressed as:
*452 Taxable income from sources outside Total tentative United the United States X States income tax Total taxable income
Owens at 8.
Motors Ins. Corp. v. United States, 208 Ct. Cl. 571, 586, 530 F.2d 864, 875 (1976); Metropolitan Life Ins. Co. v. United States, 179 Ct. Cl. 606, 610, 375 F.2d 835, 838 (1967).
American Standard, Inc. v. United States, 220 Ct. Cl. 411, 416, 602 F.2d 256, 260 n.3 (1979).
Gould Coupler Co. v. Commissioner, 5 B.T.A. 499, 513 (1926).
Id.
Id.
Id.
Id. at 514. This interpretation has been consistently adhered to through subsequent changes in the Internal Revenue Code until enactment of the Revenue Act of 1934, when, as defendant says, this treatment was abolished.
Gould Coupler Co. v. Commissioner, supra note 15, 5 B.T.A. at 515-16.
Id. at 516.
Gould Coupler Co. v. Commissioner, supra note 15, 5 B.T.A. at 514; Farmers
Owens at 295.
Owensboro Conserve Co. v. Commissioner, supra note 22, 8 B.T.A. at 620.
See Revenue Act of 1921, ch. 136, § 238(a), 42 Stat. 227; Revenue Act of 1924, ch. 234, § 240(b), 43 Stat. 253; Revenue Act of 1926, ch. 27, § 240(b), 44 Stat. 9; Revenue Act of 1928, ch. 852, § 142(b), 45 Stat. 791.
Gould Coupler Co. v. Commissioner, supra note 15, 5 B.T.A. at 514; Farmers Deposit Nat'l Bank v. Commissioner, supra note 22; Owensboro Conserve Co. v. Commissioner, supra note 22.
Defendant uses this term to refer to the tentative consolidated tax before the credit has been taken "against” it. That tentative tax is not a "liability” and the amount thereof equal to the credit will never be, because it will never be assessed.
Owens at 8.
It may also violate the provisions of section 7806 of the code.
Under T.D. 6674, 1963-2 C.B. 392, taxpayers during the 1962 taxable year had the option to elect whether to take one or the other.
Owens at 282.
It may be helpful in following defendant’s steps to consider that action No. 2 provided the fraction for determining the apportionment in action No. 1, resulting in the "proportionate” figure used as the subtrahend in action No. 3.
Treas. Reg. § 1.862(b) (1966).
Motors Ins. Corp. v. United States, supra note 13, 208 Ct. Cl. at 591, 530 F.2d at 876; Commissioner v. Ferro-Enamel Corp., 134 F.2d 564 (6th Cir. 1943).
Therefore, the proper calculation here is:
All foreign taxable income X Not definitely
All worldwide taxable income allocable expenses
See step 1 of the Government’s "actions,” supra.
Owens at 8 and 282.
See Rev. Rul. 57-116, 1957-1 C.B. 245; I.R.C. § 63; Owensboro Conserve Co. v. Commissioner, supra note 22.
See Owens at 216.
Id. See also [1964] 38A (2d) Tax Mngm’t (BNA) at 82; Rev. Rul. 58-567, 1958-1 C.B. 335; Treas. Reg. § 1.902(2)(d) (1959).
Owens at 216. See also Rev. Rul. 57-116, 1957-1 C.B. 245.
Rev. Rul. 58-618, 1958-2 C.B. 430.
See Owens at 232. As can be seen by Professor Owens’ discussion, the per-country limitation is treated in some ways similar to the overall limitation. This does not mean, however, that the per-country limitation itself, or some per-company variation thereof, may be considered the equivalent of an overall limitation, when an overall limitation has been elected.
As noted supra, a per-company computation would prevent the averaging of foreign tax rates.
Owens at 232.
See the Board of Tax Appeals cases, supra notes 15 and 22.
Owens at 308. See full discussion at 307-08 and 318.
Under the Revenue Act of 1936, ch. 690, 49 Stat. 1648, the consolidated return regulations were republished as Treas. Reg. 97.
H.R. Rep. No. 1337, 83d Cong., 2d Sess. A306 (1953).
In fact, Treas. Reg. § 1.1502-4(D)(1) promulgated in 1965, did effect essentially the procedure advocated by defendant herein, but only for years after 1965. Treas. Reg. § 1.1602-0(a).
Owensboro Conserve Co. v. Commissioner, supra note 22, 8 B.T.A. at 621. See Rev. Rul. 57-116, 1957-1 C.B. 245, I.R.C. § 63.
Owensboro Conserve Co. v. Commissioner, supra note 22, 8 B.T.A. at 621.
Id.
G.C.M. 6640, VIII-2 C.B. 212 (1929).
Id.
Id.
Id. The Treasury declared this G.C.M. obsolete in 1968. Rev. Rul. 68-674, 1968-2 C.B. 609.
S. Rep. No. 617, 65th Cong., 3d Sess. 8-9 (1933).
Farmers Deposit Nat’l Bank v. Commissioner, supra note 22, 5 B.T.A. at 525.
Treas. Reg. 45, art. 637 (1920 ed.). This regulation is the forerunner of what now is Treas. Reg. § 1.1502-31A.
Union Elec. Co. v. United States, 158 Ct. Cl. 479, 486, 305 F.2d 850, 859 (1962).
American Standard, Inc. v. United States, supra note 14.
Don E. Williams Co. v. Commissioner, 429 U.S. 569, 579 (1977), aff’g 527 F.2d 649 (7th Cir. 1975); Solomon v. Commissioner, 67 T.C. 379, 385 (1976), aff'd, 570 F.2d 28 (2d Cir. 1977).