The Boeing Company and Consolidated Subsidiaries v. United States (537 U.S. 437)
U.S. Supreme Court · decided March 4, 2003 · Supreme Court Database (Spaeth)
- Citation
- 537 U.S. 437 · 123 S. Ct. 1099
- Decided
- March 4, 2003
- Term
- October Term 2002
- Vote
- 7–2
- Majority author
- Justice Stevens
- Issue area
- Federal Taxation
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Liberal
Opinion excerpt
Justice Stevens delivered the opinion of the Court. This suit concerns tax provisions enacted by Congress in 1971 to provide incentives for domestic manufacturers to increase their exports and in 1984 to limit and modify those incentives. The specific question presented involves the interpretation of a Treasury Regulation (26 CFR § 1.861—8(e)(3) (1979)) promulgated in 1977 that governs the accounting for research and development (R&D) expenses under both statutory schemes. We shall explain the general outlines of the two statutes before we focus on that regulation. The 1971 statute provided special tax treatment for export sales made by an American manufacturer through a subsidiary that qualified as a “domestic international sales corporation” (DISC). The DISC itself is not a taxpayer; a portion of its income is deemed to have been distributed to its shareholders, and the shareholders must pay taxes on that portion, but no tax is payable on the DISC’S retained income until it is actually distributed. See 26 U. S. C. §§ 991-997. Typically, “a DISC is a wholly owned subsidiary of a U. S. corporation.” 1 Senate Finance Committee, Deficit Reduction Act of 1984, 98th Cong., p. 630, n. 1 (Comm. Print 1984) (hereinafter Committee Print). The statute thus provides an incentive to maximize the DISC’S share — and to minimize the parent’s share — of the parties’ aggregate income from…
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