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that taxpayers may be required to use the inventory and/or
accrual method even though they do not have goods on hand. To
use the lack of inventory on hand as a reason to hold that
respondent has abused his discretion is, likewise, not
appropriate.9 Although the opinion in Ansley-Sheppard-Burgess
Co. v. Commissioner, supra, focused on section 448, the parties
in that case stipulated that the taxpayer did not maintain an
inventory and met the requirement of section 448(b)(3). In this
case, no such agreement exists.
In this case, petitioner is not exempted from showing that
the cash method clearly reflected its income by any of the
expedients relied upon by the majority. Moreover, petitioner has
not shown that respondent’s determination was plainly arbitrary.
The use of Osteopathic Med. Oncology & Hematology, P.C. v.
Commissioner, supra, as a pervasive rule that income from
services, by definition, cannot involve the sale of goods or
merchandise would be unsound.10 The majority’s holding here
would have the effect of overruling numerous cases, including
several involving similarly situated taxpayers engaged in the
construction industry. The effect of the majority’s holding is
to exempt contractors in the construction industry from sections
9 That reasoning is further weakened by petitioner’s failure
to show that no materials were on hand at the close of its
taxable year.
10 For example, at the other end of the spectrum, a service
(as opposed to self-service) grocery store provides many services
for its customers in connection with the sale of its merchandise.
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