Anderson-Doughty-Hargis Co. v. United States

Plaintiff corporation seeks to recover a refund in taxes paid in the year 1941. Such refund is due plaintiff if it suffered a net loss in the year 1943. Defendant denies that plaintiff realized a loss in the latter year.

The facts of the case are not in dispute. Plaintiff, a plumbing, heating and sheet metal concern, entered into a contract with the Government for the installation of plumbing, heating, water and sewer installations on the Hanford Engineering Project in Washington. The contract in question was known as a “unit price contract.” Plaintiff’s low bid per unit constituted the basic element of the total cost of doing the work on an indefinite number of units. , Detailed plans and specifications had not been completed and were not available at the time plaintiff bid upon and executed the contract.

The taxpayer commenced work on the project in late August, 1943. Plans and specifications were modified as work progressed and costs increased. From the records maintained by plaintiff, it became evident that the costs per unit were exceeding the unit price.

Plaintiff maintained an accounting system for this particular contract whereby it established on its books monthly…