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separate identity, become part of the hardened concrete, and are
thus “indispensable and inseparable from the service provided by
the taxpayer”, majority op. p. 27; (g) driveways and walkways are
improvements to real property and, ipso facto, cannot be
merchandise. Because of the majority’s conclusion that the
materials that went into the product (sidewalks, driveways, and
foundations) were not merchandise, the majority does not discuss
whether they were material income-producing factors.
A full and complete analysis of the record does not support
the majority’s ultimate finding of fact that the materials and
products were merely supplies consumed in petitioner’s
performance of a service for customers. Likewise, an analysis of
established precedent of this Court leads to the conclusion that
petitioner has not carried its burden of showing: That the
materials and/or finished product were not material income-
producing factors; that the cash method of accounting more
clearly reflects income; and, ultimately, that respondent abused
his discretion by determining that petitioner should change to
the accrual method.
(a) Petitioner’s Business Is Not Primarily Providing a
Service--To be sure, petitioner is engaged in a labor-intensive
activity. Generally, the construction industry is considered to
be service oriented. Most businesses, however, have some element
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