contracts for the fiscal year under review, and (b) The contractor enters into a written (1) That the contractor will employ such different method of accounting for the purposes of the renegotiation proceedings for the year under review and all subsequent years, whether such proceedings are concluded by agreement or order; (2) That no cost or expense recognized in the renegotiation proceedings for the first year covered by the agreement will be recognized in any subsequent renegotiation proceeding; and (3) That the computation of losses, if any, in preceding fiscal years (see section 1457.8 of this subchapter) will be made on the basis of such different method of accounting. (ii) Under this section, a contractor may adopt a different method of accounting for the purpose of determining all amounts received or accrued and costs paid or incurred in a fiscal year, as in the case of a change from a cash receipts and disbursements method of accounting to an accrual method of accounting; or it may adopt a different method of accounting for a particular item of cost or for a particular class of items of cost which would result in recognizing such item or items in one fiscal year rather than another. (iii) Subject to the foregoing conditions, the Board will also permit a contractor to adopt for renegotiation purposes the completed contract method of accounting for contracts to be performed over a period of more than one fiscal year, which, because of circumstances of performance, would require estimates of performance and allocation of income and cost that could result in material distortion in accounting on an interim basis prior to completion. Such contracts may include contracts for construction of major facilities or major units (such as a vessel or group of vessels) when the profits can best be determined upon completion. (iv) If a contractor employs, for the purposes of a renegotiation proceeding relating to the year under review, a method of accounting different from that which it employed for the purposes of a renegotiation proceeding relating to the preceding fiscal year, whether pursuant to this section or otherwise, it will be required to employ such different method of accounting for the purposes of all subsequent renegotiation proceedings, and the amounts received or accrued and costs paid or incurred which have been recognized in prior renegotiation proceedings will not be recognized in the proceedings relating to the year under review. (3) Allocation of costs.-In general, the costs paid or incurred with respect to renegotiable business in the fiscal year under review will be the costs allocated to such business and such year by the contractor's established cost accounting method if that method reflects recognized accounting principles and practices. If in the opinion of the Board there is no adequate or effective cost accounting method in use, or if the method employed does not properly reflect such costs because there are unjustified or improper allocations of items of cost in the accounting records or in the reports or statements filed for the purpose of renegotiation, costs will be allocated in accordance with such method as in the opinion of the Board does properly reflect such costs. The fact that all receipts and accruals during a fiscal year are classifiable as renegotiable does not necessarily mean that all items of cost estimated to be deductible in that year are allocable to renegotiable business: (4) Tax deductions.-When an item of cost is allocable in whole or in part to renegotiable business, the Board will estimate the amount allowable as a deduction or exclusion under chapter 1 of the Internal Revenue Code, and such estimated amount will be allowed as a cost of renegotiable business in the fiscal year under review to the extent that it is allocable to such business and such year in accordance with the principles set forth in this paragraph (b). No such item of cost will be allowed in an amount less than or in excess of that estimated to be deductible or excludable from income under the Internal Revenue Code, and all items of cost will be allocated to the fiscal year in which they are allowable in the determination of taxable income under said Code, except as otherwise provided in this paragraph (b). When it is clear that a contractor's deductions and ex item allowable as a "cost" by such Regulation (6) Conditional allowance of cost.-If an occasion should arise in which the Board is unable to make a reasonable estimate of whether or the extent to which a particular item is allowable as a deduction or exclusion under the Internal Revenue Code for the year under review and the item is material in relation to the excessive profits to be eliminated, the Board may allow the item as a cost in renegotiation, provided that the contractor agrees to refund as additional excessive profits the amount so allowed to the extent that such amount may finally be determined to be not allowable as a deduction or exclusion under the Internal Revenue Code for the year under review. clusions under the Internal Revenue Code re- (7) Costs previously allowed in renegotiation.-No item of cost will be deemed allocable to renegotiable business to the extent that such item has, in a previous renegotiation under the act or under any other renegotiation law, been allocated to renegotiable business in determining excessive profits, notwithstanding that such item may be a deduction or exclusion under chapter 1 of the Internal Revenue Code in computing taxable net income for the taxable period corresponding to the fiscal period covered by the current renegotiation. (5) Effect of cost principles promulgated by other agencies.-Agreements for the allowance or disallowance of costs entered into by a contractor with another agency of the Government, either by specific contractual provision or by acceptance (expressed or implied) of Government regulations or policies, are not controlling with respect to recognition of such costs for renegotiation purposes. Thus, a cost properly disallowed in accordance with the Armed Services Procurement Regulation, in connection with a contract to which such Regulation is applicable, will nevertheless be recognized for renegotiation purposes if such cost is a proper Federal income tax deduction. Similarly, an (3-15-66) (8) Replacement of inventory involuntarily liquidated.-Under section 22(d) (6) of the Internal Revenue Code, a taxpayer using the last in, first out inventory method may, for any year in which it involuntarily liquidated any part of its base stock inventory, elect to adjust retroactively its net income for tax purposes for such year by reference to the costs of replacing in a subsequent year the inventory so involuntarily liquidated. The excess of such replacement costs over base stock costs is neither an exclusion nor a deduction under the Internal Revenue Code, but merely a retroactive adjustment of net income. For purposes of renegotiation, there will be allowed as a cost and allocated between renegotiable and non-renegotiable 183 business according to the principles set forth in this paragraph the base stock costs and the excess of replacement costs, or of the estimated replacement value in the fiscal year in which the involuntary liquidation occurred, over the base stock costs. Similarly, the cost of renegotiable business will be reduced, to the extent allocable thereto, by any excess of base stock costs over replacement costs, or over the estimated replacement value in the fiscal year in which the involuntary liquidation occurred. Such cost allowance or reduction will be made whether or not the use of the base stock inventory constitutes involuntary liquidation under the provisions of the Internal Revenue Code and even though such inventory is not actually replaced until a susbequent year. (c) Costs allocable to uncompleted portions of terminated contracts and subcontracts.(1) Allowed in renegotiation.-Costs allocable to the uncompleted portion of any terminated contract or subcontract which is subject to renegotiation will be allowed as costs in renegotiation. (See sec. 1457.6 (a) of this subchapter.) Such costs will be allowed however, only to the extent that, and for the fiscal year for which, they are estimated to be deductible in the computation of taxable income under the Internal Revenue Code (see sec. 29.42-1 of Bureau of Internal Revenue Regulations (29 CFR 29.42-1) and see also Bureau of Internal Revenue Mimeograph No. 5897) and will not be allowed to the extent theretofore allowed as items of cost in any previous renegotiation under the act or under any other renegotiation law. (2) Segregation of costs allocable to uncompleted portions of terminated contracts and subcontracts. Costs allocable to the uncompleted portions of terminated contracts and subcontracts shall be segregated from other costs pertaining to renegotiable business, unless the costs allocable to such uncompleted portions of contracts and subcontracts do not constitute a material portion of the contractor's total renegotiable costs. Such segregation may be required to be made in such general or such detailed manner as the Board may deem necessary. (3) Effect of waiver of termination claims.The principles stated in subparagraphs (1) and (2) of this paragraph with respect to the allowance of costs allocable to the uncompleted portions of terminated contracts and subcontracts and the segregation of such costs are equally applicable whether or not the contractor has waived all or any part of the compensation to which it might be entitled. 1459.2 Salaries, wages and other compen- (b) Allowances.-Under section 23 (a) of 147 14 Part 1470 Information Required of Contractors 1470.1 Scope of part. 1470.2 Statutory provision. 1470.3 Filing of financial statement. FORMS AND INSTRUCTIONS 1470.90 Standard Form of Contractor's Report. 1470.92 Instructions for filing. AUTHORITY: Sections 1470.1 to 1470.92 issued under section 109, Pub. Law 9, 82d Cong. Interpret or apply section 105, Pub. Law 9, 82d Cong. 1470.1 Scope of part.-This part deals with the filing of financial statements required of contractors or elected to be filed by contractors, and other information. 1470.2 Statutory provision.-Section 105(e) (1) of the act provides as follows: Board may require any person who holds contracts or Furnishing of financial statements, etc.-Every person who holds contracts or subcontracts, to which the provisions of this title are applicable, shall, in such form and detail as the Board may by regulations prescribe, file with the Board, on or before the first day of the fifth calendar month following the close of his fiscal year, a financial statement setting forth such information as the Board may by regulations prescribe as necessary to carry out this title. [In addition to the statement required under the preceding sentence, every such person shall at such time or times and in such form and detail as the Board may by regulations prescribe, furnish the Board any information, records, or data which are determined by the Board to be necessary to carry out this title. Any person who willfully fails or refuses to furnish any statement, information, records, or data required of him under this subsection, or who knowingly furnishes any such statement, information, records, or data containing information which is false or misleading in any material respect, shall, upon conviction thereof, be punished by a fine of not more than $10,000 or imprisonment for not more than one year, or both.] The preceding sentence shall not apply to any such person with respect to a fiscal year if the aggregate of the amounts received or accrued under such contracts and subcontracts during such fiscal year by him, and all persons under control of or controlling or under common control with him, is not more than the applicable amount prescribed in subsection (f) (1) or (2) of this section; but any person to whom this sentence applies may, if he so elects, file with the Board for such fiscal year a financial statement setting forth such information as the Board may by regulations prescribe as necessary to carry out this title. 1470.3 Filing of financial statement.-(a) When renegotiable sales exceed statutory "floor".-In accordance with the requirements of the first sentence of section 105(e) (1) of the act, the "Standard Form of Contractor's Report" (as set forth in § 1470.90) is hereby prescribed as the form of financial statement required to be filed by every person who holds renegotiable prime contracts or subcontracts when the aggregate renegotiable receipts or accruals of such person and all other persons under control of or controlling or under common control with such person exceed the applicable minimum amount for renegotiation prescribed in section 105(f) (1) or (2) of the act. This includes brokers and manufacturers' agents and others whose principal business falls within the definition of subcontracts set forth in section 103(g)(3) of the act. For fiscal years ending on or before June 30, 1956, the Standard Form of Contractor's Report is composed of two parts (RB Form 1 and RB Form 1B). See 1470.90 (a) and (b). For fiscal years ending after June 30, 1956, the Standard Form of Contractor's Report is composed of The RB Form 1 only. See § 1470.90 (c). No spe- (b) When renegotiable sales are less than statutory "floor".-In accordance with the requirements of the first sentence of section 105 (e)(1) of the act, the "Statement of NonApplicability of the Renegotiation Act of 1951, as amended," is hereby prescribed as the form of financial statement for use by any person who holds renegotiable prime contracts or subcontracts when the aggregate renegotiable receipts or accruals of such person and all other persons under control of or controlling or under common control with such person do not exceed the applicable minimum amount for renegotiation prescribed in section 105(f) (1) or (2) of the act. As set forth in § 1470.91 (a) of this subchapter, this Statement is required to be filed by every such person with respect to any fiscal year ending on or before June 30, 1956. As set forth in § 1470.91(b) of this subchapter, this Statement may be filed by any such person, at his election, with respect to any fiscal year ending after June 30, 1956. (c) Sufficiency of contents.-The Standard Form of Contractor's Report is required to be completed in accordance with the instructions therefor. However, if any of the information called for by the Standard Form of Contractor's Report for a fiscal year has been furnished previously by the contractor to the Board, the contractor may complete the Standard Form of Contractor's Report by incorporating therein, by reference, the information so furnished and making a specific statement of the time and place of such filing. The Statement of NonApplicability, when it is to be filed, should be completed in accordance with the instructions therefor. (d) Time for filing.—(1) Fiscal years ending on or before June 30, 1956.-Removed to Appendix. (2) Fiscal years ending after June 30, 1956.Except as otherwise provided in § 1467.31 (d) of this subchapter with respect to fiscal years ending after June 30, 1956, every contractor who is required to file a financial statement for any such fiscal year shall file the Standard Form of Contractor's Report (RB Form 1 as set forth in 8 1470.90 (c)) on or before the first day of 402 the fifth calendar month following the close of such fiscal year, whether or not any specific request for filing has been made. Any contractor who is entitled to file the Statement of NonApplicability for any such fiscal year, and who elects so to do, shall file such statement on or before the first day of the fifth calendar month following the close of such fiscal year. (3) When time to file income tax return has been extended. Notwithstanding any other provisions of this paragraph (d), if a contractor is required to file the Standard Form of Contractor's Report for a fiscal year, and the time of such contractor to file a Federal income tax return for such fiscal year shall have been extended by the Internal Revenue Service, such contractor shall not be required to file the Standard Form of Contractor's Report with respect to such fiscal year until fifteen (15) days after the extended due date fixed in the document evidencing such extension of time, provided that a copy of such document is filed with the Board on or before the date when, but for the provisions of this sentence, the contractor would have been required to file the Standard Form of Contractor's Report with respect to such fiscal year. Unless the Federal income tax return of the contractor for such fiscal year shall have been filed before the extended due date fixed in such document, a Standard Form of Contractor's Report for such fiscal year filed before such extended due date may be returned to the contractor, and if so returned will not constitute the filing of a financial statement under section 105(e) of the Act and will not commence the running of the 1-year period of limitations prescribed in section 105 (c) of the Act. (e) Filing rules.-General rules applicable to the time, place, and manner of filing the Standard Form of Contractor's Report and the Statement of Non-Applicability are set forth in section 1472.6 of this subchapter. (f) Availability of forms.-Copies of the Standard Form of Contractor's Report and the Statement of Non-Applicability may be obtained from The Renegotiation Board, Washington 25, D.C. (g) Effect of filing.-The filing of a Standard Form of Contractor's Report or a Statement of Non-Applicability in accordance with the provisions of this section will not relieve any prime contractor or subcontractor of the duty to furnish such other information, records. or |