- 9 -
At the outset, we note that it is clear that petitioner
provides a service to its clients; if its clients wanted only to
purchase asphalt, they could have done so by dealing directly
with the asphalt supplier.
Previously, we examined certain service transactions to
determine whether the transaction in substance involved solely
the sale of a service, or whether the transaction involved the
sale of a service and merchandise. Wilkinson-Beane, Inc. v.
Commissioner, supra (funeral business's caskets are merchandise);
Thompson Elec., Inc. v. Commissioner, T.C. Memo. 1995-292
(electrical contractor's wire, conduit, and electrical panels are
merchandise); Honeywell Inc. v. Commissioner, T.C. Memo. 1992-453
(taxpayer's "consideration" of cost of rotable parts in
determining amount of fixed fee charged customers in maintenance
service business does not establish that those parts were
acquired and held for sale; held, rotable spare parts are not
merchandise), affd. without published opinion 27 F.3d 571 (8th
Cir. 1994); J.P. Sheahan Associates, Inc. v. Commissioner, T.C.
Memo. 1992-239 (contractor's roofing materials are merchandise);
Surtronics, Inc. v. Commissioner, T.C. Memo. 1985-277
(electroplating metals are merchandise). In this case, we must
decide whether petitioner is a seller of only a service or a
seller of a service and merchandise.
5(...continued)
3, 1997), and the authorities cited therein.
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