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used on cargo ships at its equipment yard that it used to store
equipment and some hardware items.
The Construction Cycle
A. The Bid
During the year at issue, petitioner performed its
construction activity in the following manner. Petitioner
obtained a set of building plans from a developer and then
visited the construction site to evaluate the soil, weather, and
traffic conditions, and to ascertain the location of the
materials suppliers. Petitioner calculated its bid price by
summing its estimates of the cost of the labor and materials
required to perform the work plus a margin for profit based upon
the cost of the labor, the quantity of materials, and the
complexity of the job.
The following is a typical bid worksheet prepared by
petitioner:
Typical Bid Worksheet
Ready-mix concrete $547.80
Sand 225.00
Other materials 69.44
Other materials 7.70
Other materials 4.80
Total 854.74
Tax (8.5%) 72.65
Total materials cost 927.39
Plus labor 477.20
Equals 1,404.59
Plus 15% profit 210.69
Total 1,615.28
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Last modified: May 25, 2011