- 54 - substantial compared to its receipts, the material is a substantial income-producing factor even if the taxpayer does not markup the prices charged to its customers for the material.” What I distill from the Wilkinson-Beane, Inc. line of cases is that, where the question is whether a provider of services is using supplies or selling merchandise, the answer turns on whether the commodity in question is a substantial and identifiable source of revenue. If so, and if the merchandise is an income-producing factor, than such merchandise must be inventoried and an accrual method is appropriate (and may be required) to match costs and revenue. On the facts before us, I would require inventories because petitioner is selling merchandise that is an income-producing factor. The majority’s finding that the chemotherapy drugs are subordinate to the services rendered ignores the substantiality and centrality of the income attributable to the chemotherapy drugs and involves conclusions that have no basis in the record. The only facts stipulated with respect to the medical aspects of petitioner’s business are set forth in the margin.7 Petitioner is 7 When an individual first becomes a patient of petitioner, one of petitioner’s physicians examines the patient in order to determine the proper chemotherapy treatment for that patient. When a patient has been evaluated and a chemotherapy regime has been prescribed, the patient begins regular, periodic treatments. (continued...)Page: Previous 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Next
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