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Simon, the Court of Appeals for the Second Circuit noted that one
of the conclusive facts in finding the taxpayer did not maintain
inventories was that the taxpayer had no stock or merchandise on
hand and no warehouse or storeroom for merchandise. Simon v.
Commissioner, supra at 232. Here, as discussed below, we find as
fact that petitioner did indeed have stock on hand and a
warehouse where it stored materials.
In addition to the above-described materials petitioner
acquired in its business, respondent alleges that petitioner had
a warehouse where it stored materials such as large piping, duct
work, plumbing materials, sheet metal, small hardware pieces, and
materials left over from various job sites. Petitioner admits
that its office contains a large warehouse where it keeps
materials such as scraps from old jobs, doors, and some duct
work. Moreover, petitioner concedes that if it does maintain the
"warehouse inventory" as alleged by respondent, "then there is no
question that it will have title to it." Petitioner contends
however, both at trial and on brief, that the warehouse space was
shared by petitioner and two corporations run by the brothers of
petitioner's president. At trial, Barden, petitioner's
president, testified that his brother, Howell, who owned General
Mechanical Corporation (General Mechanical), had shut down his
company after being in business for 20 years. Barden claimed
that all of the material from General Mechanical's shop was
brought to petitioner's warehouse and stored there by Howell.
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