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Petitioner owns 20 hauling trucks which it uses to transport
the sand and gravel. If petitioner’s customers order amounts of
sand and gravel exceeding petitioner’s transportation
capabilities, petitioner hires third parties to meet customer
demand.
On the delivery date, petitioner’s employees travel to the
supplier’s storage site, load the sand and gravel purchased onto
petitioner’s trucks, and transport the sand and gravel to the
customer’s construction site.5 As to the Byron sand, once
petitioner’s employees load it onto petitioner’s trucks and
Unimin creates a “weighmaster certificate”, Unimin considers the
Byron sand to be petitioner’s property. Because petitioner
acquires and delivers the sand and gravel to its customers during
the same business day, petitioner does not possess any sand and
gravel at the beginning or end of its business day.
On petitioner’s 1994 Federal corporate income tax return
(1994 tax return), petitioner described its business activity as
“sales” and its product as “construction materials”. Petitioner
maintained its books and records on the accrual method of
accounting and reported its income for Federal tax purposes on
the cash method. On its 1994 tax return, petitioner reported
gross receipts of $3,483,206 and cost of goods sold of
5 Petitioner’s employees perform similar tasks for
customers who only request petitioner to transport (and not
acquire) sand and gravel.
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Last modified: May 25, 2011