(b) Excluded from consideration under this heading are “sales made and services rendered”, including sales of merchandise forming a part of the utility's stock in trade and also “sales of securities”, both of which have been hereinbefore considered. The quoted clause relates to the sale of other kinds of personal property, as for example, sales of furniture, fixtures, machinery, equipment, and other items of fixed assets not ordinarily held as a part of stock in trade—a kind of personal property which would not properly be included in merchandise inventory if on hand at the close of the reporting period. Profit from the sale of the kind of personal property here under consideration is required to be included in gross income.

Question 48:

A telephone company, not engaged in merchandising wire, sells 5,000 pounds of copper wire to an electric light company realizing a profit on the transaction. Is such profit required to be included in the gross income of the telephone company? Answer: Yes.