-81-
(b) In the case of merchandise purchased
since the beginning of the taxable year, the
invoice price * * *
Although petitioner disputes that the transactions by which
Consolidated acquired customer cores constituted purchases,
petitioner agrees with respondent that if the Court were to find
that such transactions were purchases, the term "merchandise
purchased" in section 1.471-3(b), Income Tax Regs., includes raw
materials purchased by a manufacturer, such as the customer cores
purchased by Consolidated. However, petitioner contends that
that regulation does not apply in determining the cost of the
customer cores acquired by Consolidated because there was no
invoice issued by any of Consolidated's customers and no invoice
price for any of those cores. On the record before us, we reject
petitioner's contention. We have found that at or about the time
that a customer delivered a customer core to Consolidated,
Consolidated prepared a sales invoice28 (viz, the customer core
sales invoice) which identified the type and the number of
customer cores of each type that each of its customers delivered
to it. We find no significance for purposes of section 471 and
section 1.471-3(b), Income Tax Regs., in the fact that it was
Consolidated, and not its customers, that generated the customer
core sales invoices. We also have found that the price which
28 Indeed, petitioner stipulated that the customer core
sales invoice prepared by Consolidated was a "sales invoice".
Attached to each customer core sales invoice was, inter alia, a
completed copy of a request for core credit.
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