delivered the opinion of the court:
This is an action under the War Contract Hardship Claims Act, known as the Lucas Act, 60 Stat. 902, as amended, 62 Stat. 869, 992, 41 U. S. C. § 106 note (1946 Ed. Supp. V), to recover from the United States the sum of an alleged net loss which plaintiff claims it sustained without fault or negligence on its part in the performance of various Government contracts and subcontracts between September 16, 1940, and August 14,1945.
The case was before us in 1953 when defendant moved for summary judgment on grounds that plaintiff had failed to file a proper “written request for relief” with respect to its losses within the meaning of section 3 of the Lucas Act. We sustained defendant’s motion as to four of plaintiff’s claims, but denied it as to five of its claims remanding these latter claims for hearing before a trial commissioner. Hub Industries, Inc. v. United States, 126 C. Cls. 239 (1953). We now have before us the report of the trial' commissioner, together with the exceptions and briefs of both parties.
As the hearing developed, a number of issues arose which are now before us for determination. These are: (1) whether plaintiff sustained a net loss on all its contracts and subcontracts under which work, supplies, or services were furnished for the Government between September 16,1940, and August 14, 1945; and, (2) with respect to each of the five claims upon which plaintiff seeks relief, (a) whether an adequate written request for relief was filed within the meaning of section 3 of the Lucas Act, (b) whether a loss was incurred between September 16, 1940, and August 14, 1945, on the contract or subcontract upon which each claim is based and (c) whether any such loss incurred was without fault or negligence on plaintiff’s part.
Since we agree with the conclusion of the trial commissioner in respect to issue (1) above that the plaintiff did not sustain a net loss on all its contracts and subcontracts with the Government during the statutory period, we dispose of the case on that basis and find it unnecessary to resolve any of the questions pertaining to the specific claims upon which plaintiff seeks recovery. We think an analysis of the *34facts in the light of the provisions of the Lucas Act justifies this conclusion.
Section 2 (a) of that act provides:
In arriving at a fair and equitable settlement of claims under this Act, the respective departments and agencies shall not allow any amount in excess of the amount of the net loss (less the amount of any relief granted subsequent to the establishment of such loss) on all contracts and subcontracts held by the claimant under which work, supplies, or services were furnished for the Government between September 16,1940, and August 14,1945, * * *
If, therefore, a claimant has had a net profit from all his Government contracts and subcontracts during the statutory period, he is precluded from recovery under the Lucas Act even though he may have sustained losses on particular Government contracts or subcontracts. Plaintiff does not disagree that such is the law, but insists that it did sustain a net loss from Government work during the statutory period. We cannot agree.
During the period between September 16,1940, and August 14, 1945, the plaintiff furnished work, supplies, or services for the Government under a total of 136 contracts and subcontracts. The plaintiff contends that it suffered a net overall loss amounting to $374,809.15 in the performance of such contracts and subcontracts. Defendant, on the other hand, maintains that the plaintiff realized an overall profit of $432,930.86 from these contracts and subcontracts. The trial commissioner found that plaintiff did not suffer a net loss on all the contracts and subcontracts.
The wide variance between the calculations of plaintiff and defendant as to the profit or loss from plaintiff’s operations during the statutory period results from disagreement between the parties as to whether certain items of expense or loss that plaintiff sustained during the period are properly allocable as part of the cost of performance of the Government contracts and subcontracts within the meaning of the Lucas Act and the regulations promulgated thereunder. (Exec. Order 9786, Oct. 5,1946,11 Fed. Beg. 11553,8 C. F. B. 165 (1946 Supp.).) In all, there are eight items of expense or loss which were allocated by the plaintiff as part of the reasonable and necessaiy cost of performance of its Govern*35ment contracts and subcontracts which are disputed by the defendant. We need not, however, discuss all of these disputed items. We are satisfied that three of the eight items are not properly allocable by the plaintiff to its cost of performing the Government work and, since the elimination of these three items leaves plaintiff with an overall net profit from Government work during the statutory period, it is precluded from recovery by section 2 (a) of the Lucas Act, supra.
I. ENGINEERING AND ROYALTY FEES PAYABLE TO AIRCRAFT COMPONENTS LIMITED
By an agreement dated May 20,1940, Aircraft Components Limited, a British corporation, granted to the plaintiff for a five-year period the exclusive right to manufacture, license, sublicense, make, use, and sell any and all of its products in the United States, its territories, dependencies, and possessions. Aircraft Components agreed to furnish to the plaintiff all the technical data necessary for the successful utilization of its inventions and developments. As compensation, plaintiff agreed to pay to Aircraft Components, at the end of the five-year period, a specified percentage of the manufacturing cost of all' sales made by the plaintiff.
By February 28, 1944, plaintiff had incurred an obligation to Aircraft Components of $653,292.97 under the 1940 agreement. On February 28, 1944, a new agreement was entered into by the plaintiff and the successor of Aircraft Components whereby plaintiff’s obligation of $653,292.97 under the 1940 contract was settled for $200,000 which latter sum was to be paid by plaintiff to the successor of Aircraft Components in installments.
The February 28, 1944 agreement released the plaintiff from paying $453,292.97 of its obligation which had accrued under the 1940 contract. No part of this released sum was ever actually paid by the plaintiff, yet in computing its overall net loss, plaintiff charged against Government contracts $269,252.90 which represented the percentage of the released obligation of $453,292.97 allocable to such contracts.
In support of its position that a percentage of this released obligation should be charged to Government work, plaintiff *36maintains that the item “was a capital transaction and does not fall witbin the Lucas Act”; that it was treated by the Treasury Department as a cancellation of indebtedness and not construed as either income or reduction of expense to the plaintiff.
Frankly, we are unable to follow plaintiff’s argument. The plain fact of the matter is that the entire cost to the plaintiff for what it received between May 20,1940, and February 28, 1944, under the 1940 contract was $200,000. Plaintiff claims that because of its bookkeeping system the $458,292.97 which was released in 1944 should be classified as an expense on the ground that it was accrued during the years in which the obligation arose, rather than when it was paid. When the larger part of the obligation was cancelled in 1944 an increased profit resulted which plaintiff would have us disregard. Obviously, we cannot do so: the part of plaintiff’s obligation which was released was not a cost at all and cannot be considered in determining plaintiff’s overall net loss.
II. ENTERTAINMENT EXPENSES
In computing its overall net loss, plaintiff allocated as part of its cost of performance of the Government contracts $71,522.91 which represents part of the plaintiff’s entertainment expenses during the years 1942-1945.1 The regulations established under the Lucas Act expressly exclude entertainment expenses from consideration in computing costs of performance. Exec. Order 9786, supra, par. 101.7e. We need not decide whether this regulation would be conclusive in all cases, since, in the present case, plaintiff wholly failed to establish that its so-called entertainment expenses were a reasonable and necessary cost of performing its contracts, and, as to the greater part of the item, failed even to show that the expenditures were in any way related to its Government work. The record fully supports the trial commissioner’s conclusion that these entertainment expenses should be excluded from the computation of plaintiff’s cost of performing Government contracts and subcontracts.
*37HI. SYNCHRONICS, INCORPORATED
Plaintiff invested $61,000 in a wholly owned subsidiary known as Synchronies, Incorporated, which was organized to obtain and use certain patents. Plaintiff made advances of $21,011.24 to this subsidiary. The investment was ultimately abandoned by the plaintiff and the advances were written off its books as uncollectible. In computing its overall net loss, plaintiff charged its entire loss of $82,011.24 from the Synchronies venture to its cost of performing Government contracts.
Plaintiff obtained one Navy contract for $40,000 (Contract No. Noa (S) 4001) which contemplated the use of certain of the patents involved in the Synchronies organization.2 However, the evidence is not sufficient to justify the conclusion that any part of the investment in or the advances to Synchronies was necessary for or used in the performance of that contract.
Plaintiff maintains, however, that it should be permitted to charge the losses incurred by its abandonment of the Synchronies venture to the cost of performing Government contracts “in view of the fact that the cost was incurred in anticipation of acquiring contracts” involving the patents they had obtained. Manifestly, such speculative investment costs cannot be considered as costs of performance of Government contracts and, therefore, cannot be considered in determining plaintiff’s overall net loss. Cf. Arlington Trust Company, Inc., et al. v. United States, 134 C. Cls. 251 (1956).
Since by the elimination of the items of expense and loss discussed above it appears plaintiff realized an overall net profit from all its Government work during the statutory period, it is our conclusion that plaintiff is precluded from recovery by the restrictive conditions of section 2 (a) of the Lucas Act, supra. The petition will be accordingly dismissed.
It is so ordered.
Laramore, Judge; Madden, Judge; Whitaker, Judge; and Littleton, Judge, concur.*38FINDINGS OF FACT
The court, having considered the evidence, the report of Trial Commissioner Mastín G. White, and the briefs and argument of counsel, makes findings of fact as follows:
1. The plaintiff, Hub Industries, Inc., is a corporation organized and existing under the laws of the State of Delaware. From the time of its incorporation on July 25, 1989, until July 26, 1943, it was known as the Dowty Equipment Corporation. It had its principal place of business in the city of New York, N. Y., while it was a going concern. Since December 31,1945, the plaintiff has been inactive except for the settlement of contract termination claims against the defendant and the litigation of the claim on which the present proceeding is based.
2. This proceeding was instituted by the plaintiff on February 28, 1949, under the provisions of the so-called Lucas Act (Public Law 657,79th Congress, 60 Stat. 902, as amended by section 37 of Public Law 773, 80th Congress, 62 Stat. 869, 992). In its petition, the plaintiff originally requested a determination by the court that the plaintiff was equitably entitled to receive from the defendant the sum of $179,762.84 (plus the costs of the action) because of losses allegedly sustained in furnishing work, supplies, or services for agencies of the defendant under the following contracts and subcontracts :
Contract W535-ac-26295
Purchase Order 33375
Contract W535-ac-28783
Contract W33-038-ac-630
Purchase Order 18448-D
Purchase Order 18449-D
Purchase Order 19493-D
Purchase Order 343-430779
Purchase Order P-38698-A
Contract W30-Q53-ac-561
Contract W33-038-ac-8164
Contract W33M)38-ac-6842
3. On January 15, 1953, the defendant filed a motion for summary judgment on the ground that the plaintiff had not, as required by section 3 of the Lucas Act, filed any written request for relief on or before August 14,1945.
*394. In its decision dated September 30,1953, on the defendant’s motion for summary judgment, the court granted tbe motion and dismissed the petition as to that part of the plaintiff’s claim involving contracts W535-ac-26295, W535-ac-28783, W33-038-ac-8164, and W33-038-ac-6842, but denied the motion as to the remainder of the plaintiff’s claim. With regard to the partial denial of the defendant’s motion for summary judgment, the court did not rule with finality on the question whether the plaintiff had filed proper written requests for relief on or before August 14,1945, respecting the losses allegedly suffered in the performance of the several contracts and subcontracts as to which the motion was denied, but, in effect, left such question open for decision on the basis of the evidence to be developed at the trial of the case.
5. During the period between September 16, 1940, and August 14, 1945, the plaintiff furnished work, supplies, or services for the Government under a total of 136 contracts and subcontracts. The plaintiff contends that it suffered a net overall loss amounting to $374,809.15 in the performance of such contracts and subcontracts.
6. (a) The plaintiff’s figure of $374,809.15 referred to in finding 5 is based in part upon an allocation against Government contracts and subcontracts of $269,252.90 representing part of the plaintiff’s onetime obligation for engineering and royalty fees under an agreement dated May 20, 1940, between the plaintiff and Aircraft Components Limited, a British corporation.
(b) In the agreement of May 20, 1940, Aircraft Components Limited granted to the plaintiff for a five-year period the exclusive right to manufacture, license, sub-license, make, use, and sell any and all of the products of Aircraft Components Limited in the United States and its territories, dependencies, and possessions; and Aircraft Components Limited agreed to furnish to the plaintiff all the technical data necessary for the successful utilization of Aircraft Components Limited’s inventions and developments. As compensation, the plaintiff agreed to pay Aircraft Components Limited at the end of the five-year period a specified percentage of the manufacturing cost of all sales made by the plaintiff.
*40(c) As of February 28, 1944, the plaintiff had incurred an obligation aggregating $653,292.97 under the agreement of May 20, 1940. On the date mentioned, the plaintiff and the successor to Aircraft Components Limited entered into a new agreement whereby the agreement of May 20, 1940, was canceled and the plaintiff’s financial obligation under the earlier agreement was settled for the sum of $200,000, which was to be paid by the plaintiff in installments to Aircraft Components Limited’s successor.
(d) Notwithstanding the release of the plaintiff’s obligation to the extent of $453,292.97 by the new agreement of February 28,1944, the. plaintiff contends that $269,252.90 of the released amount is chargeable against Government contracts and subcontracts for the purpose of determining whether the plaintiff sustained a net overall loss in the performance of such contracts and subcontracts. However, the $269,252.90 does not represent an actual cost incurred by the plaintiff in the performance of Government contracts and subcontracts, and it cannot properly be regarded as a charge against such contracts and subcontracts for the purposes of the Lucas Act.
(e) The elimination of the $269,252.90 non-cost item from the plaintiff’s calculations reduces the plaintiff’s claimed overall loss in the performance of Government contracts and subcontracts to $105,556.25.
7. (a) The plaintiff’s claim of a net overall loss in the performance of Government contracts and subcontracts is based in part on an allocation against such contracts and subcontracts of $71,522.91 representing part of the plaintiff’s expenses for entertainment during the years 1942-1945, which amounted to a total of $83,135.66.
(b) The regulations established pursuant to the Lucas Act specifically exclude entertainment expenses from consideration in the computation of cost of performing Government contracts. (Exec. Order 9786, Oct. 5, 1946, 11 Fed. Reg. 11553, 3 C. F. K. 165 (1946 Supp.), par. 101.7e.) In any case, the evidence does not show that the expenses referred to in paragraph (a) of this finding constituted reasonable and necessary costs incurred by the plaintiff in the performance of Government contracts and subcontracts.
*41(c) Tbs elimination from the plaintiff’s calculations of the $71,522.91 representing entertainment expenses further reduces the plaintiff’s claimed overall loss in the performance of Government contracts and subcontracts to $34,033.34.
8. (a) The plaintiff’s claim of a net overall loss in the performance of Government contracts and subcontracts is based in part upon the loss of an investment, in the amount of $61,000 that the plaintiff made in a wholly owned subsidiary known as Synchronies Incorporated, and upon the failure to recover advances amounting to $21,011.24 that the plaintiff made to Synchronies Incorporated. The investment was ultimately abandoned by the plaintiff and the advances were written off the plaintiff’s books as uncollecti-ble.
(b) Plaintiff obtained one contract (.Contract No. Noa (S) 4001) which was related to the venture referred to in paragraph (a) of this finding. The evidence does not show that the investment and advances referred to in paragraph (a) of this finding were reasonable and necessary costs incurred by the plaintiff in. the performance of this contract.
(c) The evidence does not show that the investment and advances referred to in paragraph (a) of this finding constituted reasonable and necessary costs incurred by the plaintiff in the performance of Government contracts and subcontracts.
(d) The elimination from the plaintiff’s calculations of the $61,000 and the $21,011.24 representing the investment in and the advances to Synchronies Incorporated leaves the plaintiff’s claim of a net overall loss in the performance of Government contracts and subcontracts without any support.
9. The plaintiff did not suffer any net loss on all the contracts and subcontracts held by the plaintiff for the furnishing of work, supplies, or services for the Government between September 16,1940, and August 14,1945.
CONCLUSION OE LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is not entitled to recover, and its petition is therefore dismissed.
Plaintiff’s total entertainment expenses for tlie period amounted to $83,135.66.
“This contract -was later terminated and plaintiff accepted a settlement thereunder. It is not a contract upon which plaintiff is presently suing.