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inventory. No other reasoning is offered or appears obvious for
such a holding, and no prior case discussed this premise. That
holding appears to be in conflict with the Court of Appeals for
the Eleventh Circuit’s holding in Knight-Ridder Newspapers, Inc.
v. United States, 743 F.2d 781 (11th Cir. 1984). In that case,
the court held that, even though the taxpayer sold an extremely
perishable commodity and had no inventory of finished goods, the
taxpayer was required to account for inventories because
newspapers were merchandise, and there was a significant
fluctuation of newsprint and ink on hand. By way of comparison,
a morning newspaper will be stale later the same day.
How does the majority distinguish between concrete that
hardens and news that becomes stale? The hardened concrete, if
not formed, and the old newspaper both lose substantial value.
Petitioner, however, ordered no more concrete than it needed or
could use in a particular period of time, and the incidence of
wasted or unused and hardened concrete was not a financial factor
or risk in petitioner’s business. To the contrary, after the
concrete was poured, petitioner had created a valuable product
for which it would receive payment.
In addition, the lack of inventory on hand has already been
held not to be determinative of the question of whether
merchandise is an income-producing factor for the application of
the accrual method. See, e.g., J.P. Sheahan Associates, Inc. v.
Commissioner, T.C. Memo. 1992-239. Also, the fact that
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