Sec. 1464.1 Part 1464 Consolidated Renegotiation of 1464.2 1464.3 1464.4 Letter form of request for renegotiation on consolidated basis (affiliated group). 1464.91 Letter form of request for renegotiation on consolidated basis (related group). AUTHORITY: 88 1464.1 to 1464.91 issued under sec. 109, Pub. Law 9, 82d Cong. Interpret or apply sec. 105, Pub. Law 9, 82d Cong. 1464.1 Consolidated renegotiation of affiliated group.-(a) Statutory provision.Section 105 (a) of the act provides in part as follows: (d) Definition of "affiliated group". As used in this section, an "affiliated group" means one or more chains of includible corporations connected through stock ownership with a common parent corporation which is an includible corporation if (1) Stock possessing at least 95 per centum of the voting power of all classes of stock and at least 95 per centum of each class of the nonvoting stock of each of the includible corporations (except the common parent corporation) is owned directly by one or more of the other includible corporations; and Renegotiation shall be conducted on a consolidated basis with a parent and its subsidiary corporations which constitute an affiliated group under section 141 (d) of the Internal Revenue Code if all of the corporations included in such affiliated group request renegotiation on such basis and consent to such regulations as the Board shall prescribe with respect to (1) the determination and elimination of excessive profits of such affiliated group, and (2) the determination of the amount of the excess profits of such affiliated group allocable, for the purposes of section 3806 of the Internal Revenue Code, to each corporation included in such affiliated group. (b) Definition of "affiliated group”.—(1) (2) The common parent corporation owns directly stock possessing at least 95 per centum of the voting power of all classes of stock and at least 95 per centum of each class of the nonvoting stock of at least one of the other includible corporations. Section 141(d) of the Internal Revenue Code of 1939 provides as follows: As used in this subsection, the term "stock" does not include nonvoting stock which is limited and preferred as to dividends. (2) Section 1504(a) of the Internal Revenue Code of 1954 (corresponding with section 141(d) of the Internal Revenue Code of 1939 and incorporated in the act by the provisions of section 7852 (b) of the Internal Revenue Code of 1954) provides as follows: (a) Definition of "affiliated group". As used in this chapter, the term "affiliated group" means one or more chains of includible corporations connected through stock ownership with a common parent corporation which is an includible corporation if (1) Stock possessing at least 80 percent of the voting power of all classes of stock and at least 80 percent of each class of the nonvoting stock of each of the inclubible corporations (except the common parent corporation) is owned directly by one or more of the other includible corporations; and (2) The common parent corporation owns directly stock possessing at least 80 percent of the voting power of all classes of stock and at least 80 percent of each class of the nonvoting stock of at least one of the other includible corporations. As used in this subsection, the term "stock" does not include nonvoting stock which is limited and preferred as to dividends. (3) The term "affiliated group" as used in this part means a group of corporations which qualify under the definition quoted in subparagraph (1) of this paragraph, with respect to fiscal years to which the Internal Revenue Code of 1939 is applicable, or under the definition quoted in subparagraph (2) of this paragraph, with respect to fiscal years to which the Internal Revenue Code of 1954 is applicable. A corporation cannot be a member of an affiliated group unless it is an "includible corporation" as defined in subsections (e), (f), (g) and (j) of section 141 of the Internal Revenue Code of 1939, or subsections (b), (c), and (d) of section 1504 of the Internal Revenue Code of 1954, whichever is applicable (see § 1451.33 of this subchapter). (c) Fiscal year of an affiliated group. The fiscal year of an affiliated group for the purpose of consolidated renegotiation shall be the fiscal year of the common parent corporation. 1464.2 Request for consolidated renegotiation of affiliated group; when approved.The Board will approve a request for consolidated renegotiation of all members of an affiliated group who qualify therefor. A member of an affiliated group other than the common parent corporation shall not be deemed to qualify for consolidated renegotiation unless: (a) Such member had renegotiable receipts or accruals during the fiscal year under review; (b) Except as provided hereafter in this paragraph, such member was a member of the affiliated group during the entire fiscal year of the common parent corporation and its fiscal year for Federal income tax purposes ended on the same date as the fiscal year of the common parent corporation. The foregoing limitation shall not disqualify a member; (1) if the fiscal period of such member ended on the same date as the fiscal year of the other member or members but began on a later date because such member was incorporated during such fiscal year, and if such member during its entire first fiscal period was a member of the group; or (2) if the fiscal period of such member began on the same date as the fiscal year of the other member or members but ended on an earlier date because such member was dissolved during such fiscal year and if such member during its entire last fiscal period was a member of the group. 1464.3 Consolidated renegotiation of a related group.-(a) Statutory provision.Section 105 (a) of the act provides in part as follows: By agreement with any contractor or subcontractor, 282 and pursuant to regulations promulgated by it, the Board may in its discretion conduct renegotiation on a consolidated basis in order properly to reflect excessive profits of two or more related contractors or subcontractors. (b) Definition of "related group.”—A “related group" means two or more related contractors, one of whom controls the other, or others, or who are under common control (see § 1451.31 of this subchapter). The members of the group may consist of persons including corporations, partnerships, joint ventures, associations, sole proprietorship, or a combination of some or all of these. (c) Fiscal year of a related group.-The fis- 1464.4 Request for consolidated renego- (b) Each of such persons who participated ground that each is reasonably comparable with the same standard commercial service. (c) Qualitative requirements.-Section 106 (e) (4) (E) (i) of the act provides that a like service must be of the same or similar kind, must be performed with the same or similar materials, and must have the same or a similar result as a standard commercial service from the performance of which the contractor has receipts or accruals in the fiscal year under review. In determining whether two services meet these requirements, the Board will consider both their generic and their specific characteristics. These requirements may be satisfied without the two services necessarily involving identical operations. (d) Price limitation.-Section 106 (e) (4) (E) (ii) of the act provides that, to qualify as a like service, the price of such service shall be not in excess of the lowest price at which such service is performed under similar circumstances by the contractor for civilian industrial or commercial purposes. This limitation refers to commercial sales of the service by the contractor reasonably related in time to the sale for which exemption is claimed. shall be filed by every contractor who claims exemption under section 106 (e) of the act for any articles or services, except standard commercial articles (see § 1467.42(b)). A separate application must be filed by every contractor claiming the exemption; affiliated or related contractors may not file consolidated applications. (e) The 55 percent test.-Section 106 (e) (4) (E) (iii) of the act provides that the receipts or accurals of the contractor from nonrenegotiable sales of a like service and the standard commercial service selected for comparison must aggregate at least 55 percent of the contractor's total receipts or accurals from sales of such services in the fiscal year. (c) Contents.-The Application for Commercial Exemption shall contain the information and data prescribed in the following instructions: (1) Description of articles or services.-Set forth a description of the articles or services claimed to be exempt, including representative catalogs or brochures, if available. State clearly whether exemption is being claimed for (i) articles in a standard commercial class or classes of articles; (ii) standard commercial services; or (iii) like services-i.e., services which are reasonably comparable with a standard commercial service or services. If it is desired in a single application to claim exemption for any standard commercial services or like services, as well as for articles in one or more standard commercial classes of articles, a statement in substantially the following form must be included: "The contractor hereby consents and agrees that the 6-month period prescribed in section 106 (e) (3) (B) (ii) of the act shall apply with respect to all the articles and services for which exemption is claimed in this application." 1467.55 Application for commercial exemption.-(a) Form.-No printed form is prescribed for the filing of an application for exemption under section 106 (e) (3) of the act. However, the information and data prescribed in paragraph (b) of this section will be known as the "Application for Commercial Exemption." This application shall be furnished in writing, shall be entitled "Application for Commercial Exemption," and shall consist of numbered paragraphs corresponding with the numbers in paragraph (c) of this section. Attention is called to the fact that the submission of this application is subject to the penalty provisions of section 105 (e) (1) of the act. (b) Use.-Except as provided in § 1467.43, the Application for Commercial Exemption (2) Standard commercial classes of articles. With respect to articles in a standard commercial class of articles, identify at least one article in the class which either is customarily maintained in stock by the contractor or is offered for sale in accordance with a price schedule regularly maintained by the contractor, except. that if all the articles in the class are listed in a price schedule furnished with the application, a statement to that effect will suffice; set forth information sufficient to establish that all the articles in the class are of the same kind, are manufactured of the same or substitute materials, and are sold at reasonably comparable prices; include or attach a Certificate of Pricing in substantially the form set forth in § 1467.50(b); and set forth a schedule of sales 361 If the new durable productive equipment exemption is applicable (see Part 1454 of this subchapter), the sales in the schedule should be stated before application of such exemption. (3) Standard commercial services. With respect to each standard commercial service, state the total amount of sales of such service in the fiscal year under review, and the amount and percent of the nonrenegotiable sales thereof in such fiscal year. Include or attach a Certificate of Pricing in substantially the form set forth in § 1467.50 (b), but modified to replace references to sales of articles for civilian industrial or commercial use with references to sales of services for civilian industrial or commercial purposes (see § 1467.53 (c)). (4) Like services.-With respect to any like service, describe the standard commercial service with which such like service is claimed to be reasonably comparable; set forth information sufficient to establish that such services are of the same or a similar kind, are performed with the same or similar materials, and have the same or a similar result; include or attach a Certificate of Pricing in substantially the form set forth in § 1467.50(b), but modified to replace references to sales of articles for civilian industrial or commercial use with references to sales of services for civilian industrial or commercial purposes (see § 1467.53 (c)); and set forth a schedule of sales showing the following with respect to the fiscal year under review: (d) Time for filing. Except as provided in § 1467.43, every contractor who claims that the exemption provided in paragraph (1)(B) or paragraph (2) of section 106 (e) of the act is applicable to any of his receipts or accruals in a fiscal year, under prime contracts with the Departments or subcontracts, shall file an Application for Commercial Exemption as soon as practicable after the close of such fiscal year, but in no event later than the date upon which the contractor is required to file the Standard Form of Contractor's Report with respect to such fiscal year. If the Application for Commercial Exemption is filed on or before the date upon which the contractor is required to file the Standard Form of Contractor's Report with respect to such fiscal year, the contractor shall not be required to file the Standard Form of Contractor's Report until the date prescribed in § 1470.3 (d) of this subchapter for the filing thereof or until the 30th day after the Board sends to the contractor written notice of the action of the Board on the claim for exemption, 362 whichever occurs later. If, as a result of such action of the Board, the renegotiable receipts or accruals of the contractor and all related contractors in such fiscal year aggregate less than the minimum amount for renegotiation pre scribed in section 105 (f) (1) of the act, the contractor shall not be required to file the Standard Form of Contractor's Report but shall be entitled, if he elects so to do, to file the Statement of Nonapplicability with respect to such fiscal year. 1467.56 Duty to furnish additional information. The filing of an Application for Commercial Exemption in accordance with the provision of this section will not relieve any prime contractor or subcontractor of the duty to furnish any other information, records or data which are determined by the Board to be necessary to carry out its responsibilities under section 106 (e) of the act. 1467.57 Effect of filing application for commercial exemption.-(a) In general.When an Application for Commercial Exemp Sec. Part 1471 Assignment of Contractors for Renegotiation 1471.1 When assignment is made. 1471.2 How assignment is made. 1471.3 Reserved. 1471.4 Reassignment to Board. AUTHORITY: Sections 1471.1 to 1471.4 issued under section 109, Pub. Law 9, 82d Cong. Interpret or apply section 107, Pub. Law 9, 82d Cong. 1471.1 When assignment is made.-After receipt of a Standard Form of Contractor's Report from a contractor, the Board will assign the case to a Regional Board for renegotiation if it determines that further proceedings in the matter are warranted. No assignment will be made when the Board can readily decide on the basis of the information contained in the Standard Form of Contractor's Report that the contractor has not realized excessive profits for the fiscal year and that no purpose would be served by making an assignment to a Regional Board. If the Board decides not to make an assignment, the Board will notify the contractor to this effect. See § 1498.6 (c) of this subchapter. 1471.2 How assignment is made.-(a) An assignment may be made to a Regional Board on some basis other than geographical in an appropriate case when it is believed that such assignment will promote efficiency in the renegotiation procedure. Similarly, the Board will reassign a case from one Regional Board to another if it appears that efficiency of renegotiation procedure will be promoted thereby. generally be redesignated in accordance there- (b) At the time of assignment, every case will be designated by the Board as either a Class A case or a Class B case. Generally, a Class A case will be one in which the contractor reports on the Standard Form of Contractor's Report that it has derived from subject contracts profits of more than $800,000 and a Class B case will be one in which the contractor reports on the Standard Form of Contractor's Report that it has derived from subject contracts profits of $800,000 or less. Cases assigned on and after September 18, 1954, will be designated in accordance with the preceding sentence; cases previously assigned will (c) The Regional Board to which the case is assigned will notify the contractor of the assignment and will also advise the contractor whether the case is a Class A case or a Class B case. (d) Except in cases governed by paragraph (e) of this section, with respect to contractors whose receipts or accruals are wholly or predominantly under subcontracts described in section 103 (g) (3) of the act, a Class A case will generally be one in which the contractor reports on the Standard Form of Contractor's Report that its aggregate of such receipts or accruals is $100,000 or more and a Class B case will be one in which the contractor reports on the Standard Form of Contractor's Report that its aggregate of such receipts or accruals is less than $100,000. Cases assigned on and after September 18, 1954, will be designated in accordance with the preceding sentence; cases previously assigned will generally be redesignated in accordance therewith upon request of a Regional Board if not already concluded by clearance notice, agreement or order, and if such redesignation is otherwise expedient. If the fiscal year of the contractor is a fractional part of 12 months, the $100,000 amount will be reduced to the same fractional part thereof for the purposes of this paragraph. 421 |