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customers. That statement is contrary to existing case law. It
is well established that the length of time the goods are held
does not have a bearing on whether they are merchandise/
inventory.
Even if the taxpayer possessed title to the goods for an
instant, it is sufficient to require a taxpayer to inventory the
goods as the stock in trade. See Addison Distrib., Inc. v.
Commissioner, T.C. Memo. 1998-289; Middlebrooks v. Commissioner
T.C. Memo. 1975-275. In Addison Distrib., Inc., the taxpayer had
electronic materials for a very short period (for inspection
purposes), and then it forwarded the materials to the customer.
In Addison Distrib., Inc., it was held that the taxpayer should
be required to account for inventory and be on the accrual method
even though it appeared unlikely that there would be any
inventory on hand at the end of an accounting period. In another
case involving a taxpayer in the construction industry, it was
held that inventories were required, and the accrual method
should be used even though the materials were shipped directly to
job sites, and no substantial amounts of materials were
inventoried at the taxpayer’s warehouse. See Tebarco Mechanical
Corp. v. Commissioner, T.C. Memo. 1997-311 (involving a plumbing,
heating, and air-conditioning contractor who was generally
involved in commercial construction projects).
Considering the above-cited cases, it is hard to understand
the majority’s point or distinction in emphasizing that inventory
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