Tutor-Saliba Corporation, A California Corporation - Page 1

                                   115 T.C. No. 1                                     

                               UNITED STATES TAX COURT                                

                    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                      

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