Rushlight Automatic Sprinkler Co. v. United States of America, United States of America v. Rushlight Automatic Sprinkler Co.

The 1953 fiscal year’s income of a joint venture, of which Rushlight Automatic Sprinkler Co. (the defendant below, being both appellant and appellee here, and hereinafter referred to as Rushlight) was a member, was pursuant to § 3806(b) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 3806 (b), renegotiated for excessive profits by the Los Angeles Regional Renegotiation Board. In September 1956 the Board determined that the joint venture had received excessive profits of which Rushlight’s individual share was $22,-250. Thereupon the District Director of Internal Revenue advised the Board that Rushlight was entitled to a tax credit in the sum of $8,560.71 under the provisions of said § 3806(b). Accordingly, in November 1956 Rushlight paid to the United States, and it with that credit accepted, the sum of $13,-690.29 (the record balance of said $22,-250 less said $8,560.71 credit is actually $13,689.29, but the discrepancy is de minimis) as full payment and satisfaction of Rushlight’s $22,250 liability respecting such excessive profits.

That $8,560.71 tax credit was mistakenly allowed because at the time of its allowance the United States erroneously thought that Rushlight had…