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disagreeing with the majority’s findings and holding. Of the
remaining two Judges, one dissented without comment and one
concurred in the result but did not join the majority. To be
sure, the majority’s opinion in Osteopathic Med. Oncology &
Hematology, P.C., is the view of this Court, but it is
substantially a factual finding that the drugs in that case were
a supply consumed in the performance of a service and that the
drugs were not merchandise.6 In any event, the case before us
now does not involve a medical practice, the administration of
drugs, or hybrid accounting methods. The facts we consider here
involve the use of relatively substantial amounts of materials to
construct finished products.
The question of whether an accounting method clearly
reflects income is a factual question that is decided on a case-
by-case basis. See Hamilton Indus., Inc. v. Commissioner, 97
T.C. 120, 128-129 (1991). Without detailing all of the findings
in Osteopathic Med. Oncology & Hematology, P.C., it should
suffice to understand that the chemotherapy drugs were consumed
in the patients’ bodies. The physicians were treating patients’
illnesses by administering drugs into the patients’ bodies.
Although there was disagreement about whether the drugs were
merchandise or a supply, Osteopathic Med. Oncology & Hematology,
6 See, however, Judge Halpern’s dissenting opinion
indicating that the majority’s conclusion may constitute a rule
of law as it relates to businesses involved in medical practices.
Osteopathic Med. Oncology & Hematology, P.C. v. Commissioner, 113
T.C. 376, 402 (1999) (Halpern, J., dissenting).
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