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title to the sand and gravel. Petitioner and respondent
stipulate that after petitioner loads the Byron sand onto its
trucks for delivery and Unimin creates a “weighmaster
certificate”, Unimin considers the Byron sand to be petitioner’s
property. We interpret that stipulation to mean that title to
the Byron sand passes from Unimin to petitioner at that point in
time.
The record does not reflect whether petitioner acquires
title to the sand and gravel that petitioner purchases from the
20 suppliers. In Addison Distrib., Inc., T.C. Memo. 1998-289, we
described a taxpayer as both a “buyer pursuant to its contract
with [a] vendor or subcontractor and [as a] seller pursuant to
its contract with its customers”. Citing California Commercial
Code section 2106 (West 1964), which provides that “a ‘sale’
consists in the passing of title from the seller to the buyer for
a price”, we concluded that the taxpayer had acquired title to
goods which were purchased from the vendor or subcontractor for
eventual sale to the taxpayer’s customers. See id. In light of
California Commercial Code section 2106, our characterization of
petitioner as a seller of sand and gravel, and petitioner’s
failure to dispute the transfer of title, we see no reason to
treat petitioner’s contractual and legal relationship with the 20
suppliers differently from petitioner’s business dealings with
Unimin. We therefore conclude that petitioner acquires title to
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Last modified: May 25, 2011