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accounting. See Wilkinson-Beane, Inc. v. Commissioner, supra.
In Wilkinson-Beane, Inc., we held that merchandise, the cost of
which (in different taxable years) constituted 14.7 percent and
15.4 percent of the taxpayer’s gross receipts, was an income-
producing factor in the taxpayer’s business. See also Knight-
Ridder Newspapers, Inc. v. United States, 743 F.2d 781, 791 (11th
Cir. 1984) (wherein newspapers, the cost of which constituted
17.6 percent of the taxpayer’s total revenues, were considered an
income-producing factor).
For its 1994 taxable year, petitioner reported cost of goods
sold in the amount of $1,867,497. Petitioner argues that
$786,723 of the $1,867,497 amount relates to petitioner’s
transportation activities, thereby leaving $1,080,774 for the
cost associated with petitioner’s acquisition of the sand and
gravel. Assuming arguendo that petitioner’s figures are correct,
because the cost of the sand and gravel constitutes at least 31
percent of petitioner’s gross receipts ($1,080,774 � $3,483,206),
we conclude that the sand and gravel is an income-producing
factor in petitioner’s business.9
On brief, petitioner does not address whether it acquires
9 Petitioner does not include in cost of goods sold the
costs involved in filtering, gathering, and removing the Byron
sand from Unimin’s processing plant. These costs would
significantly increase the cost of goods sold and the percentage
that cost of goods sold would constitute of petitioner’s gross
receipts.
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