Bangor Punta Operations, Inc. v. United States

SPRECHER, Circuit Judge.

This appeal involves a dispute between taxpayer and the government over the proper method of accounting for the cost of taxpayer’s inventory.

Bangor Punta Operations, Inc., the taxpayer, is a Wisconsin manufacturer of diverse types of engines for many different industries. Because it uses the accrual system of accounting, taxpayer employs inventories in determining its annual net income. The method chosen to allocate production costs between inventory and current or “periodic” expenses is important, because those costs assigned to inventory are not deducted from gross…