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assistance. These customers hire petitioner only for its
transportation services.4
Usually, a customer contacts petitioner to order sand and
gravel (measured by weight in tons) 1 day before the sand and
gravel are needed at the construction site (the order date). On
the order date, petitioner informs the customer of petitioner’s
total charge for acquiring and transporting the sand and gravel
(contract amount). Petitioner calculates the contract amount by
multiplying petitioner’s charge for acquiring and transporting 1
ton of sand and gravel times the number of tons of sand and
gravel ordered by the customer. Petitioner’s charge for
acquiring and transporting 1 ton of sand and gravel consists of
four amounts: (1) Petitioner’s costs in acquiring the sand and
gravel, (2) petitioner’s profit for acquiring the sand and gravel
(approximately 20 to 25 percent of petitioner’s costs in
acquiring the sand and gravel), (3) petitioner’s costs in
transporting the sand and gravel from the storage site to the
construction site (and petitioner’s related profit for
transporting the sand and gravel), and (4) a sales tax levied on
amounts (1) through (3).
Petitioner, however, does not provide the customer an
itemized description of the separate amounts constituting the
4 The record does not reflect what revenues and expenses
relate to customers using petitioner solely for transportation
services.
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Last modified: May 25, 2011