Tutor-Saliba Corporation, A California Corporation - Page 14




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          phrase “estimated contract price”.5  This language indicates that           
          Congress was aware of the fact that taxpayers were being required           
          to estimate when using the percentage of completion method in               
          accounting for long-term contracts.  The fact that section                  
          460(b)(2)(A) requires a taxpayer to substitute “actual contract             
          price and costs” for “estimated contract price and costs” when              
          applying the look-back method at the contract’s completion                  
          underscores the fact that the total contract price used in the              
          percentage of completion method calculation is an estimate of the           
          total contract price and is likely to change during the                     
          performance of the contract.  This conceptual underpinning is the           
          antithesis of the all events test.6                                         
               The term “estimated” does not necessarily include, as                  
          respondent contends, revenues from disputed claims.  The term               
          “estimate,” however, does not preclude the possibility that                 
          Congress intended that disputed claims be included.  In any                 



               5 The parties do not dispute the definition of the term                
          “estimated”.  According to the dictionary, “estimate” means to              
          judge tentatively or approximately the value, worth or                      
          significance of; to determine roughly the size, extent, or nature           
          of; or to produce a statement of the approximate cost of.  See              
          Merriam-Webster’s Tenth Collegiate Dictionary 397 (1997).                   
               6 Furthermore, in a number of tax accounting cases, the                
          Supreme Court has decided that estimates of anticipated expenses            
          are not accruable as deductions under the all events test.  See             
          United States v. General Dynamics Corp., 481 U.S. 239, 243-244              
          (1987).  The repeated use of the word “estimated” indicates that            
          standard principles of accrual accounting, including the all                
          events test, are not determinative.                                         





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