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improvements by checks made out to each supplier and petitioner
as joint payees, which petitioner forwarded to each material
supplier. The joint checks were not deposited in petitioner's
bank account.
Therefore, the materials were used up before petitioner sent
its invoice and the lien releases for the completed work to the
developer, before the developer paid for the materials, and
before petitioner recorded the materials expense.
Respondent makes much of the fact that, unlike the concrete,
small amounts of some of the materials may have been left over
after the job. Respondent argues that these materials could have
been loaded onto petitioner's truck and moved to another job site
or stored in its equipment yard. It is clear from the facts that
no concrete was left over, and any leftover sand or gravel was
abandoned onsite upon the completion of each job, as the expense
of moving it would have exceeded its cost; moreover, only an
insignificant amount of any of the other material could have been
left over. Cf. J.P. Sheahan Associates, Inc. v. Commissioner,
T.C. Memo. 1992-239 (roofing materials and supplies remaining at
the close of a job are returned to the supplier for credit).
The parties stipulated that petitioner kept some of the
hardware items in the storage container at its place of business.
Since the total cost of all the hardware items was approximately
5 percent of the total cost of a typical contract, and all the
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