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(5) In every case that the determination of a Regional Board is deemed to be the determi

upon which an amount of excessive profits benation of the Board pursuant to the provisions

comes due and payable under an order shall be of subparagraph (3) or (4) of this paragraph,

referred to as "the due dateof such payment.

When excessive profits are determined by an as the case may be, the Board will give notice by order of the Board, the due date is the day such registered mail to the contractor that the Board order is issued and entered. When excessive has decided not to review the case.

profits are determined by an order of a Regional
(6) If the Board decides to review the deter Board, and no review of such determination and
mination, the Board will so advise the contrac order is initiated by the Board, the due date
tor and the applicable procedure will be that set is the day such determination and order of the
forth in § 1472.4 of this subchapter.

Regional Board is deemed the determination
1475.4 Determination by Board. When and order of the Board (see § 1475.3(b)). In
the Board determines in a Class A case, or upon either case, pursuant to section 105(b)(2) of
review of a unilateral order in a Class B case, the act, interest does not accrue and become
that the contractor has realized excessive profits payable on the amount of such excessive profits
for a fiscal year and the contractor is unwilling until the thirtieth day after the due date.
to enter into an agreement for the refund of (b) Filing of requests.-Any request for an
such excessive profits, the Board will issue a extension of time to pay any sum due under an
unilateral order determining the amount of ex order shall be filed by the contractor with the
cessive profits to be refunded and give notice Board or Regional Board, whichever issued
thereof by registered mail to the contractor. such order, and a copy of any such request filed

1475.5 Tender of refund by contractor. with a Regional Board shall be filed by the
(a) Statutory provision.-Section 105(b)(2) of contractor with the Board. In all cases, at the
the act provides in part as follows:

timo a request is filed a copy thereof shall be * * * When The Tax Court of the United States,

mailed by the contractor to the collecting under section 108, redetermines the amount of exces agency designated by the Board in its notice sive profits received or accrued by a contractor or of order or in its notice that the order of a Resubcontractor, interest at the rate of 4 per centum per

gional Board is deemed the order of the Board, annum shall accrue and be paid by such contractor

but the contractor need not mail to such color subcontractor as follows: *

(C) When the amount of excessive profits deter lecting agency a copy of the information and mined by the Tax Court is less than the amount de data set forth in $ 1499.2-9(d) of this chapter. termined by the Board, interest shall accrue and be

(c) Approval of requests.--Authority to expaid on such lesser amount from the thirtieth day

tend the time to pay any sum due under an after the date of the order of the Board to the date of

order is hereby reserved to the Board. Any rerepayment, except that no interest shall accrue or be

quest for such an extension filed with a Regional payable on such lesser amount if such lesser amount is not in excess of an amount which the contractor Board will be forwarded by such Regional or subcontractor tendered in payment prior to the Board to the Board with the recommendation of issuance of the order of the Board.

the Regional Board. (b) Manner of making tender of refund. (d) Conditions.--No extension of time for In order to avoid the accrual of interest in

payment of any amount due under an order the manner set forth in section 105(b)(2)(C) shall be granted unless: of the act, the contractor shall make a tender

(1) The request for such extension of time of refund by certified check or cashier's check

is made by the contractor within thirty (30) payable to the order of the Treasurer of the

days after the due date, except that after an United States, such check to be tendered to the order has been modified to extend the time for Chairman of the Board prior to the date the

payment of any amount due thereunder, a reBoard mails its notice of the unilateral order

quest for a further extension of time for payof the Board pursuant to section 1475.4 or the

ment of any amount payable under the order date the Board mails notice of its decision not

as so modified shall be made before the date to review a unilateral order of a Regional Board

upon which such payment is due. pursuant to section 1475.3(b).

(2) The contractor establishes by satisfac1475.6 Modification of order to extend

tory evidence that it is unable to make such time for payment.--(a) Due date under order.-

payment on or before the due date, or that payFor the purposes of this section, the day

ment on or before such date would impose upon


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the contractor an undue hardship. In this connection the contractor shall file with its request for an extension of time for payment the information and data set forth in $ 1499.2-9(d) of this chapter, and upon request shall furnish such other or additional information and data as the Board or the Regional Board may specify in the particular case.

(3) The Board determines that the public interest will not be prejudiced by extending the time for payment. The Board shall have the right to impose such other terms and conditions as it shall deem necessary to protect the interests of the Government.

(e) Effect of modification of order.-No modification of an order for the purpose of extending the time for payment of any amount due thereunder shall affect the obligation of the contractor pursuant to section 105 (b) (2) of the act to pay interest on such amount from the thirtieth day after the due date. The modification of an order pursuant to this section shall not preclude the contractor from filing a petition with the Tax Court of the United States pursuant to section 108 of the act and within ton (10) days thereafter filing a good and sufficient bond, as provided in said section, to stay the execution of the order as so modified.

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section concerns the propriety of a filing 15, a period of less than 12 months; and
made under the following circumstances: A such period is a taxable year. It is therefore
Corporation and B Corporation both report a fiscal year for renegotiation purposes, and
for Federal income tax purposes on the the filing in question is proper.
calendar year basis. On July 15, the capital 1499.1-18 Renegotiation Ruling No. 18:
stock of A Corporation was wholly acquired Joint venture; separate renegotiation status;
by B Corporation. The two corporations subcontracts or assignments to or from mem-
thereafter filed a Federal income tax return

bers (interprets act sections 103(j), 105(e); on a consolidated basis for the taxable year § 1457.4 of this chapter).-(a) This section ended December 31. A similar consolidated

concerns the necessity, for renegotiation purfiling of the Standard Form of Contractor's

poses, of separating a joint venture from its Report was made for renegotiation purposes

component members. for the fiscal year ended December 31. In

(b) Section 105(e) of the Renegotiation addition, A Corporation made a renegotiation

Act of 1951 provides that every person havfiling for a stated fiscal year ended July 15.

ing renegotiable business in excess of the It is this filing that is here considered.

prescribed minimum amount in a fiscal year (b) Under section 103 (h) of the Act, the

must file a report with the Board. The term fiscal year of a contract is its taxable year

"person" as defined in section 103 (j) includes under the Internal Revenue Code. Accord

a joint venture. Thus, receipts or accruals ingly, the filing of a A Corporation for the

under renegotiable contracts and subconfiscal year ended July 15 is proper only if

tracts held by a joint venture must be rethat is its taxable year for Federal income

ported by the venture; receipts or accruals tax purposes. (See $ 1451.19 of this chapter.)

under contracts and subcontracts held by a (b) Under section 103 (h) of the Act, the

member of the venture must be reported by fiscal year of a contractor is its taxable year

the member in its own individual filing. In under the Internal Revenue Code. Accord

the determination and elimination of exingly, the filing of a A Corporation for the

cessive profits, the joint venture is an entity fiscal year ended July 15 is proper only if

separate and distinct from its members (see that is its taxable year for Federal income

$ 1457.4 of this chapter; Bass v. Stimson, 20 tax purposes. (See § 1451.19 of this chapter.)

T.C. 428, 434 (1953)). (c) Section 1.1502-76 (b) of the regula

(c) In a typical case, two or more firms tions under the Internal Revenue Code of

enter into a joint venture agreement to pro1954 (26 CFR 1.1502–76 (b)) provides, in

cure and perform a renegotiable contract or pertinent part, as follows:

subcontract. Each member agrees to con(b) Income to be included in returns for taxable year.-- (1)

tribute working capital, or to perform a Inclusion of income in consolidated return. The consolidated return of a group must include the income of the common parent

specified portion of the contract, or otherwise for that corporation's entire taxable year * * * and *** the

to further the object of the venture. The income of each subsidiary for the portion of such taxable year during which it was a member of the group.

joint venture itself may or may not establish (2) Separate return for period not included in a consolidated

a central office and hire its own employees. return. If the consolidated return of a group properly includes the income of a corporation for only a portion of such corporation's

(d) For renegotiation, the joint venture is taxable * * *, then the income for the portion of such the contractor. It files the Standard Form of taxable year not included in the consolidated return must be included in a separate return

Contractor's Report with The Renegotiation (d) Section 1.1502–76(d) of the regula

Board. The report shows the aggregate tions under the Internal Revenue Code of amounts received or accrued by the venture 1954 (26 CFR 1.1502_76(d)) provides as

under the concract. It shows the aggregate follows:

costs paid or incurred by the venture, in(d) Taxable year of less than 12 months. Any period of less cluding amounts paid to individual members than 12 months for which either a separate return or a consoli

in reimbursement of labor or material costs dated return is filed under the provisions of this section shall be considered as a separate taxable year.

or other expenses incurred by any member (e) Under the cited regulations, A Cor

for the venture. Costs incurred for materials poration was required to file a separate re

supplied or work done by such member are turn for the period from January 1 to July costs of the venture, not of the member.


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* * * »

(e) It is improper in such a case for the when loss sustained on sales below the floor joint venture to omit filing a report with the (interprets act sections 102(a), 103(m), Board. It is equally improper for any mem

105(f) (1) and (2); § 1457.9 of this chap ber of the venture, in filing its own separate

ter).(a) This section concerns the prorenegotiation report, to include as a rene

priety of carrying forward a renegotiation gotiable cost the amount of any expense re

loss sustained in a fiscal year, when the agimbursed by the venture, or to include as a

gregate renegotiable sales of the contractor renegotiable receipt the amount of such re

in such year are below the minimum amount imbursement or the amount received from

or "floor" prescribed for renegotiation in the joint venture as its distributive share of

section 105 (f) (1) or (2) of the Renegotiathe profits of the joint venture.

tion Act of 1951, as amended. (f) It is recognized that a joint venture

(b) The term "renegotiation loss' is de-
may contract with one or more of its mem-

fined in section 103 (m) of the act as mean-
bers individually. For example, it may lease
equipment from a member when the furnish-

ing, for any fiscal year, “the excess, if any,
ing of such equipment is no part of the

of costs *** paid or incurred in such fiscal member's capital contribution or other obli

year with respect to receipts or accruals gation as a participant in the venture. If a

subject to the provisions of this title over genuine subcontract is shown to exist be

the amount of receipts or accruals subject tween a joint venture and one of its members,

to the provisions of this title which were re

ceived or accrued in such fiscal year the operations of the member under such subcontract must be included in its own

Receipts or accruals are subject to the proseparate renegotiation report.

visions of the act whenever they are derived (g) If a corporation (or any other con

from contracts with any of the Departments tractor) obtains a renegotiable contract

named in or designated under section 102(a),

or related subcontracts. Pursuant to section which thereafter is subcontracted to and performed by a joint venture of which it is

105 (f) (1) and (2), receipts or accruals may a member, the joint venture must make a

not "be renegotiated” when they do not exfiling. But the corporation must file, too, even

ceed the applicable minimum amount pro

vided in such section, but this involves the though its report may show a complete "wash" of its sales and costs on the contract,

jurisdiction of the Board, not the coverage

of the act. with zero profits. (h) The assignment of a Government con

(c) It follows that the right to carry tract is prohibited by law (41 U.S.C. 15).

forward a renegotiation logs is not affected However, in certain limited circumstances

by the fact that the loss is sustained in a the Government will recognize a third party

fiscal year in which the renegotiable receipts as the successor in interest to a Government

or accruals of the contractor aggregate less contract (see, for example, Armed Services

than the minimum amount prescribed for Procurement Regulation, § 1-1602 (a) (32

renegotiation in section 105 (f) (1) or (2) of CFR 1-1602(a)). Except when a third party

the act. has been so recognized by the contracting Department, a purported "assignment" of a

1499.1-20 Renegotiation Ruling No. 20: Government contract will not be recognized

Common control; consolidated renegotiation by the Board.

of related contractors; effect of voting trusts 1499.1-19 Renegotiation Ruling No. 19: (interprets act section 105 (a) and (f); Renegotiation loss carryforward; effect on, 88 1458.6 and 1464.4(c) of this chapter).

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