Load, Inc. - Page 11

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          a taxpayer at an “on-site storage facility” are excepted from               
          inclusion in inventory.                                                     
               An on-site storage facility is defined in the regulations as           
          a storage facility that is physically attached to and that is an            
          integral part of a “retail sales facility”.  Sec. 1.263A-                   
          3(c)(5)(ii)(A), Income Tax Regs.                                            
               A “retail sales facility” is further defined as the location           
          at which merchandise is sold “exclusively to retail customers in            
          on-site sales”.  Sec. 1.263A-3(c)(5)(ii)(B)(1), Income Tax Regs.            
               With an exception not here relevant, a retail customer is              
          defined as the final purchaser of merchandise and does not                  
          include a person who resells the merchandise to others.  Sec.               
          1.263A-3(c)(5)(ii)(E)(1), Income Tax Regs.                                  
               If a storage facility does not meet the above definition of            
          an on-site storage facility, it is considered an “off-site                  
          storage facility,” and storage costs relating to property held              
          for resale are to be included in the taxpayer’s inventory.  Sec.            
          1.263A-3(c)(5)(ii)(F), Income Tax Regs.                                     
               Under section 1.263A-1(e)(3)(iii)(A), Income Tax Regs.,                
          another exception is provided to the inventory requirement of               
          section 263A for “marketing, selling, advertising, and                      
          distribution costs” relating to property held for resale.                   
               ADI argues that the costs in question qualify as marketing,            
          selling, or distribution costs of property held for resale that             






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Last modified: May 25, 2011