Charles F. Dally and Sarafrancis Dally v. Commissioner of Internal Revenue

The petitioning taxpayers are husband and wife. The wife is involved only because the income here considered was community income under Washington law. By “petitioner”, as used herein, we mean Charles F. Dally.

In May, 1942, petitioner entered into a contract with Federal Public Housing Authority for the manufacture and delivery of 1000 prefabricated housing units. Article 8 of. the contract provided: “Payments — The contractor shall be paid, upon the submission of properly certified invoices or vouchers semimonthly, ninety per cent (90%) of the prices stipulated herein for articles delivered and accepted or services rendered, less deductions, if any, as. herein provided. The remaining ten per cent (10%) of the prices stipulated herein shall not be paid until all of the construction and erection work of all the dwelling units has been finished and finally accepted by the contracting officer.” Deliveries under the contract began in October, 1942, and continued thereafter until about February 1, 1943. Payments aggregating $1,870,251.24 were made on invoices or vouchers furnished from time to time, each setting forth the number of houses delivered in the period stated therein,…