IRS prevails in Boeing case.

• Position: Continuing Education

In early March, the Supreme Court of the United States sustained the validity of Treasury regulations governing the allocation of research and development expenses between a company and its export sales subsidiary (FSC or DISC) in determining the portion of export sales income that is eligible for favorable tax treatment. In ruling 7-2 for the government, the Court rejected arguments advanced by Boeing Company that the regulations unreasonably restricted taxpayer's flexibility to group transactions along product lines, and held that none of the arguments presented by the company based on the statutory text, the text of related regulations, and the legislative history could overcome the deference due the Treasury's interpretation of the statute.

Last August, TEI filed an amicus brief with the...