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significant role in the sales of the manufactured homes to retail
customers and who, at some point and for a period of time not
established in the record, actually take title to the
manufactured homes.
We conclude that although ADI participates in the sale of
the manufactured homes to the retail customers, ADI does not sell
the manufactured homes exclusively to the retail customers (i.e.,
ADI’s sale and title transfer occurs from ADI to the independent
salespersons). Accordingly, the costs in question do not qualify
for the section 1.263A-1(e)(3)(iii)(I), Income Tax Regs.
exception from inventory for on-site storage costs.
Further, we reject ADI’s attempt to recharacterize the costs
in question as deductible marketing, selling, or distribution
costs that would be excepted from inventory under section 1.263A-
1(e)(3)(iii)(A), Income Tax Regs.
The evidence establishes that the $243,350 in question
constitutes lot lease payments, the $16,684 in question
constitutes transportation costs, the $3,423 in question
constitutes State taxes, the $2,500 in question constitutes
repair expenses, and the $280 in question constitutes maintenance
costs, all specifically required to be included in inventory
under section 1.263A-1(e)(3)(ii)(G), (K), (L) and (O), Income Tax
Regs. None of the expenses in question constitutes a marketing
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