General Dynamics Corporation and Subsidiaries - Page 33

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          taxable year the items of income and expenses that must be                  
          reported within that year.  It is relevant only to the timing of            
          deductions and income recognition.  RECO Indus., Inc. v.                    
          Commissioner, supra at 922.  Like other accounting methods, the             
          completed contract method relies on other sections of the Code,             
          such as the DISC provisions, to determine the amount of income to           
          be recognized and the amount of allowable deductions.  The                  
          purpose of the pricing rules in the DISC provisions is to                   
          determine the amount of income that taxpayers engaged in export             
          activities must recognize and the amount of income that is tax              
          deferred.  The completed contract method has a different purpose.           
          It determines the taxable year in which a related supplier                  
          recognizes the income attributable to export sales, the amount of           
          income to be recognized having been determined by the DISC                  
          provisions.  Thus, the variations or exceptions to the completed            
          contract method here do not govern which costs are allocable to             
          long-term export contracts for purposes of determining CTI.                 
               In addition, requiring taxpayers to account for prior year             
          period costs in calculating CTI does not interfere with the                 
          current deduction allowed for period costs under the completed              
          contract method.  Petitioners' interpretation of the completed              
          contract method gives taxpayers benefits in addition to their               
          ability to currently deduct period costs.  There is no indication           
          that Congress intended the limitation on deferral or exclusion to           
          promote foreign exports to include a double or extra benefit only           




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