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SC metions 1.861-8

[originally launched into cyberspace on 03/04/2003)[/i]

Dear List Subscriber,

The Supreme Court case about Boeing, which mentioned 861 (though not in any
particularly interesting context) is over. As I said before the ruling
really had nothing relevant to the 861 evidence in it, since it was only
about which rule to use to apportion R&D expenses for a DISC. You can see
the ruling here:

But while the actual point of the case wasn't of interest, it is fun to have
the Supreme Court saying this:

"[I]n promulgating 26 CFR §1.861-8 (1979), the Secretary of the Treasury
exercised his rulemaking authority under 26 U. S. C. §7805(a), which gives
the Secretary general authority to "prescribe all needful rules and
regulations for the enforcement" of the Internal Revenue Code... Even if we
regard the challenged regulation as interpretive because it was promulgated
under §7805(a)'s general rulemaking grant rather than pursuant to a specific
grant of authority, we must still treat the regulation with deference."

Hmmm... maybe someone should tell David Cay Johnston that. It was nice that
the case REINFORCED what was said in U.S. v. Correll--and half a zillion
other cases--which is that the courts are to adhere to any regulation which
is a "reasonable" interpretation of the statute, even if IT WOULDN'T HAVE
BEEN THEIR interpretation. Here is another case demonstrating that:

"When faced with a problem of statutory construction, this Court shows great
deference to the interpretation given the statute by the officers or agency
charged with its administration. "To sustain the Commission's application of
this statutory term, we need not find that its construction is the only
reasonable one, or even that it is the result we would have reached had the
question arisen in the first instance in judicial proceedings." [UDALL v.
TALLMAN, 380 U.S. 1 (1965)]

It seems that the Supreme Court thinks the regulations under 861, section
1.861-8 in particular, actually matter. Too bad no one in the media, or in
the IRS seems to think so. Never fear. That will change.


Larken Rose
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