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Act of 1918, ch. 18, 40 Stat. 1057. In general, this method has
been described as “peculiarly adapted to a business fulfilling
contracts which lap over accounting periods where the ultimate
gain or loss cannot be accurately determined until the completion
of the contract.” Fort Pitt Bridge Works v. Commissioner, 24
B.T.A. 626, 641 (1931), revd. on other grounds 92 F.2d 825 (3d
Cir. 1937); Peninsula Steel Prods. & Equip. v. Commissioner, 78
T.C. 1029, 1047 (1982). The method “is designed to provide an
alternative to the annual-accrual method of accounting for long-
term contracts for which the ultimate profit or loss is not
ascertainable until the contract is completed.” Spang Indus.,
Inc. v. United States, 791 F.2d 906, 908 (Fed. Cir. 1986); RECO
Indus., Inc. v. Commissioner, 83 T.C. 912, 921 (1984). The
completed contract method (CCM) differs from the accrual method
in that accrued income and deductions are recognized in income
when the contract is completed and not necessarily at the end of
an annual accounting period. Fort Pitt Bridge Works v.
Commissioner, supra.
Respondent contends that petitioner's reporting of the
entire profit in 1987 does not clearly reflect income because
“petitioner will be able to unreasonably defer for up to three
years, the recognition of substantial amounts of taxable income
that was realized upon the completion and delivery of each
program year's requirements for aircraft.”
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