Boeing Co. v. United States

The United States appeals the district court’s summary judgment determining that the Boeing Company and its consolidated subsidiaries (“Boeing”) are entitled to an income tax refund of approximately $419 million for the years 1979 through 1987. The issue is how research and development costs (“R & D”) should be accounted for in computing Boeing’s net income from export sales of commercial airplanes under the Internal Revenue Code’s export incentive provisions for a Domestic International Sales Corporation (“DISC”) and a Foreign Sales Corporation (“FSC”).

We have jurisdiction under 28 U.S.C. § 1291 (1994). We conclude that, in computing Boeing’s net income, the Commissioner of Internal Revenue properly applied Treas. Reg. § 1.861 — 8(e)(3) to allocate Boeing’s R & D costs to its export sales. Accordingly, we reverse the district court’s summary judgment granting Boeing’s tax refund claim.

FACTS

From 1972 to 1984, Boeing exported commercial airplanes through its subsidiary, Boeing International Sales Corporation, which qualified as a DISC under Internal Revenue Code (“I.R.C.”) § 992. After 1984, Boeing exported commercial airplanes through its subsidiary, Boeing Sales…