Business Services Industry
Tax court capitalizes model home display costs.
Tax Adviser, The, May, 2007 by O'Driscoll, David
The issue is whether the costs of placing model manufactured homes on retail sales lots to assist local independent salespersons may be currently deducted or should be included in inventory under Sec. 263A.
Facts
A and its related corporations buy and sell manufactured homes, constructed at a factory location and transported directly to the homesites of retail purchasers. Under agreements with independent salespersons, A purchases model manufactured homes and places them on retail sales lots that it leases to display the homes to the public and potential retail customers. Approximately 10% of A's sales consist of homes purchased by retail customers right off the sales lots, after negotiating with the salespersons.
A sells the manufactured...
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