- 47 -
make in 1984, after delivery of 120 aircraft, an accurate
determination of the 1982 program year profit, inasmuch as there
then remained to be delivered the vast majority of aircraft
called for under Contract 2034.
3. Independent Pricing Factor
In evaluating Contract 2034, respondent suggests that four
relevant facts and circumstances, as set forth in section 1.451-
3(e)(1)(ii), Income Tax Regs., are to be considered. Those
factors concern whether: (1) There was separate delivery and/or
acceptance of aircraft; (2) the aircraft were independently
priced; (3) there was a business purpose for several or a single
contract; and (4) there were various other customary commercial
practices involving the production of aircraft. Respondent, by
grouping the factors together, attempts to place independent
pricing on par with other factors.13 However, as decided in
Sierracin Corp. v. Commissioner, 90 T.C. 341 (1988), the
independent pricing aspect is particularly significant.
13 Respondent in an Action on Decision acquiescing in
Sierracin Corp. v. Commissioner, 90 T.C. 341 (1988), made the
following comment about our emphasis on independent pricing in
that case:
The court's undue emphasis on independent pricing
restricts the application of the regulations in other
cases and is not controlling. For example, in a
situation in which there are significant time intervals
between the delivery dates of items under a multi-unit
contract, the Service is not precluded from asserting
that the contract should be severed notwithstanding the
absence of independent pricing. [Action on Decision
1990-016 (May 18, 1990), 1990-1 C.B. 1.]
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