- 17 -
and therefore not always readily discernable. See Wilkinson-
Beane, Inc. v. Commissioner, supra at 354 ("Clearly, the meaning
of the term must be gathered from the context and the subject.").
Courts have held that "merchandise", as used in section
1.471-1, Income Tax Regs., is an item acquired and held for sale.
See, e.g., Wilkinson-Beane, Inc. v. Commissioner, supra at 354-
355 (a canvassing of authorities in the accounting field yields
several definitions, such as "goods purchased in condition for
sale", "goods awaiting sale", "articles of commerce held for
sale", and "all classes of commodities held for sale"; the
"common denominator * * * seems to be that the items in question
are merchandise if held for sale."); Honeywell Inc. v.
Commissioner, T.C. Memo. 1992-453 (rotable spare parts are
merchandise if they were acquired and "held for sale"), affd.
without published opinion 27 F.3d 571 (8th Cir. 1994); see also
Grant Oil Tool Co. v. United States, 180 Ct. Cl. 620, 381 F.2d
389, 397 (1967) (inventory is, simply stated, property that is
held for sale); Forrester v. Americus Oil Co., 19 S.E.2d 328, 330
(Ga. Ct. App. 1942) (inventory includes property held for sale
to customers in the ordinary course of trade or business). It is
important to note that all the definitions refer to property that
is held for sale, not simply property that is sold.
Congress did not intend by the predecessor of section 471
that all businesses, including some businesses that hold property
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