A. J. Industries, Inc. v. United States

In this tax case, plaintiff taxpayer appeals from a district court judgment denying it a refund for taxes and interest paid in the sum of $1,291,445.79 for the taxable years 1957 through 1961. The central question is whether taxpayer is entitled to a loss deduction under either the 1939 or 1954 Internal Revenue Codes and applicable regulations for the years 1956 or 1957, in connection with an abandoned gold mining venture in Juneau, Alaska.

On its return in 1958, taxpayer claimed a loss deduction which it carried back to 1957 and carried forward through 1961 in order to reduce taxes in those five years. The Commissioner of Internal Revenue disallowed the deduction, assessing a deficiency. Taxpayer paid the deficiency and filed a suit for refund in the United States Court of Claims, claiming a deduction for a loss in 1958. The Court of Claims ruled that the loss had occurred sometime prior to 1958, and thus denied the claim. A. J. Industries, Inc. v. United States, 388 F.2d 701 , 181 Ct.Cl. 1017 (1967).

Taxpayer then brought this action in the district court for a refund, claiming that the loss occurred in 1956 or 1957. It is not disputed that plaintiff, following the…