115 T.C. No. 1
UNITED STATES TAX COURT
TUTOR-SALIBA CORPORATION, A CALIFORNIA CORPORATION, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3110-98. Filed July 17, 2000.
Under the Tax Reform Act of 1986, Pub. L. 99-514,
100 Stat. 2085, Congress changed the reporting method
for long-term contracts from the completed contract
method to the percentage of completion method. Under
the percentage of completion method of sec. 460(b),
I.R.C., taxpayers are required to include in income
during the years of construction a portion of the
“estimated contract price.” In promulgating sec.
1.460-6(c)(2)(vi), Income Tax Regs., the Secretary
concluded that the term “estimated contract price”
includes amounts related to contingent rights and
obligations, regardless of whether the “all events
test” has been met. R, relying on the plain meaning of
the statute and its legislative history, contends that
the regulation is a valid interpretation of the statute
that satisfies congressional intent. P contends that
the all events test is a fundamental tax principle that
cannot be ignored without an express mandate from
Congress.
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