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a per-aircraft profit as of 1984 for the 120 aircraft from the
1982 program year completed in 1984, but after delivery of the
480th aircraft, petitioner could ultimately experience a per-
aircraft loss for all aircraft, including the batch completed in
1984.
The parties disagree about whether a reasonably accurate
annual determination of petitioner’s Contract 2034 profit or loss
could be accomplished. Respondent contends that petitioner was
able to determine each program year's income and expenses with
reasonable certainty. Respondent argues that petitioner was able
to do this for financial accounting purposes and to satisfy the
Government's reporting requirements and that the Government made
payments to petitioner without hold-backs or reservations to
secure future performance.
Petitioner contends that respondent's premise is factually
incorrect, and even if its profits could be determined by program
year with reasonable certainty, that factor would not bar its use
of CCM and/or serve as a reason necessitating severance of
Contract 2034. We agree with petitioner that the ability to
calculate profit for a period with reasonable certainty does not
per se mandate that the period be severed.11 On the other hand,
11 If, for example, petitioner is able to calculate the
profit or income attributable to each aircraft, would it then be
appropriate to sever Contract 2034 into 480 reportable units?
Obviously, that is only a threshold factor and not determinative
of whether severance should be applied.
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