General Dynamics Corporation and Subsidiaries - Page 64

                                       - 64 -                                         

               It is true that each aircraft was individually delivered by            
          petitioner and accepted by the Air Force, and that completion of            
          the contract was dependent upon annual congressional                        
          appropriations.  In sum and substance, however, this was a single           
          multiyear contract for the delivery of 480 aircraft.  Financially           
          and legally, Contract 2034 was no different from a long-term                
          contract to build a structure composed of 480 parts.  In either             
          event, the contract would not be completed until the 480th part             
          was completed and put in place or placed in service with the                
          other 479 parts to complete the delivery and/or form the final              
          structure.  In both situations, the first, last, and parts in               
          between, bear on the profitability of the contract.  Contract               
          2034 was a financial and technological continuum for a 4-                   
          contract-year period.  Instead of a series of 1-year contracts              
          which take 2-1/2 years each to complete, it was a 4-year contract           
          that took almost 7 years to complete.  Contract 2034 was a long-            
          term contract of the type for which CCM is a permissible method.            
               We recognize respondent's argument that petitioner’s                   
          reporting of any profit on the first group of aircraft would be             
          accelerated if Contract 2034 were severed into four separate                
          contracts.  However, we do not find that petitioner in any manner           
          distorted or abused CCM.  As a matter of principle, we must                 
          accept that CCM permits deferral beyond that which would be                 
          permitted under the accrual method.  We are unable to find that             





Page:  Previous  51  52  53  54  55  56  57  58  59  60  61  62  63  64  65  66  67  68  69  70  Next

Last modified: May 25, 2011