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all other factors that the parties consider relevant,
in such a manner that T would have entered into the
agreement with the terms agreed upon whether or not T
would actually enter into one or more additional
production agreements. However, it is unlikely that T
would have entered into the agreement but for the
expectation that T and B would enter into additional
production agreements. In 1984, the 10 aircraft are
completed by T and accepted by B. In 1984, T also
enters into an agreement with B to manufacture 20
aircraft of the same type for delivery in 1986. In
negotiating the price for these 20 aircraft, B and T
take into account the fact that the expected unit costs
for this production of 20 will be different than the
unit costs of the 10 aircraft completed in 1984, but
also that the expected unit costs of this production of
20 will be substantially higher than the costs of
future production. Because the price awarded for each
of the two agreements takes into account the expected
total costs and the risks expected for each agreement
standing alone, the terms agreed upon for any one of
the agreements are independent of the terms agreed upon
for the other agreements. Under the facts of this
example, the two agreements may not be aggregated into
one contract for purposes of applying T's long-term
contract method.
C. Discussion
1. General
Respondent correctly points out that this is not a case
where the Court must decide whether use of a particular
accounting method does or does not clearly reflect income.
Implicit in respondent's distinction is the basic principle that,
generally, CCM is accepted for Federal tax purposes as clearly
reflecting income when used by qualified taxpayers. It should be
noted that CCM inherently permits delay in reporting income or
loss beyond that permitted by annualized methods of accounting
for Federal tax purposes. Respondent agrees that petitioner is
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