"Transformation to Peacetime"

Post-war planning (TIME, Nov. 3) came out of the think stage and took its place as a debit item in the income statement of a big U.S. corporation last week. United Aircraft, announcing nine-month sales of $203,435,000, also announced a significant new deduction from them: a $4,000,000 reserve* "for the transformation from defense production to a peacetime economy."

United was the first all-aviation company to set up such a reserve. But it was preceded by Sperry Corp., also fat with defense orders, which set aside over $433,000 in the first half of 1941 for post-war "readjustments of facilities and personnel."

United and Sperry were agreed on the need for a cushion, but they disagreed on a vital point: United included its $4,000,000 reserve in "cost of sales" (i.e., deducted it before figuring taxes); Sperry pessimistically figured its taxes first. If the Treasury should rule in favor of United, these rainy-day fiscal policies may become much more popular.

*As a result of this and other deductions (including over $40,000,000 for Federal taxes), United's nine-month net income of $10,772,000 was up only 3% over 1940 v. a 157% increase in sales.

This file is automatically generated by a robot program, so reader's discretion is required.