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(2d Cir. 1972) (when service predominates, the incidental sale of
items of personal property does not alter the basic
transaction.); Aced v. Hobbs-Sesack Plumbing Co., supra at 580;
Filmservice Labs., Inc. v. Harvey Bernhard Enters., 256 Cal.
Rptr. 735, 738 (1989); Alonzo v. Chifici, 526 So. 2d 237, 241
(La. Ct. App. 1988) (in applying a "value test" to determine
whether the labor expended in constructing the item, or the
materials incorporated therein, constitute the principal value of
the contract, it is clear that building or construction contracts
involve primarily the furnishing of labor and contractual
skills).
Material may be either merchandise or supplies depending
upon whether it is held for sale or consumed in performing a
service. The differences that distinguish a supply material from
a merchandise material are determined by context. Thus, the same
material in different contexts may be either an inventory item or
a supplies item. For instance, although the paper and ink used
to prepare blueprints are inventory in the hands of the paper and
ink manufacturers, they are supplies in the hands of an
architect. See, e.g., sec. 1.263A-2(a)(2)(ii)(B)(2), Income Tax
Regs. (the cost of materials used by an architect to prepare
blueprints provided to clients may be deducted as an expense
because the blueprints are de minimis and incident to the
provision of service). This is so even though the architect
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