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J.P. Sheahan Associates v. Commissioner, T.C. Memo. 1992-239.
Possession of title to goods, even if only for an instant, is
sufficient to require a taxpayer to inventory the goods.
Addison Distrib. Inc. v. Commissioner, T.C. Memo. 1998-289;
Middlebrooks v. Commissioner, T.C. Memo. 1975-275; see also sec.
1.471-1, Income Tax Regs.
Petitioner stipulated that it acquired the purchased wood.
Petitioner stipulated that it sold the purchased wood it
acquired. We have also found that petitioner bought and sold
the wood it cut on land owned by unrelated entities. The terms
of a typical contract between petitioner and a mill state:
For the period and upon the terms and conditions
hereinafter set forth, SELLER undertakes and agrees to
sell and deliver unto PURCHASER, and PURCHASER
undertakes and agrees to purchase and accept from
SELLER, those certain quantities of pulpwood,
sawtimber, poles and piling (herein called “wood”) as
are hereinafter more particularly set forth and
described.
Petitioner obtains title to the wood before it sells it to
the mills. See Me. Rev. Stat. Ann. tit. 11, sec. 2-401 (West
1995) (passage of title). For petitioner to purchase and resell
the wood, title had to pass from the logger who cut the wood to
petitioner and then from petitioner to the mill. See also
Tebarco Mech. Corp. v. Commissioner, T.C. Memo. 1997-311.
Petitioner’s income tax returns indicate that its product
or service was “pulpwood and logs”. The logs are not consumed
by petitioner in its business. Petitioner has not asserted that
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