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delivered; and (7) the taxpayers agreed to look solely to the
owners for all amounts due under the contracts. Accord Paragon
Jewel Coal Co. v. Commissioner, 380 U.S. 624 (1965) (where the
Court applied these seven factors to decide that certain coal
mining contracts did not give the contract miners an economic
interest in the coal in place).
Our analysis of these factors in the light of the setting at
hand leads to a conclusion contrary to that desired by
petitioners. As to the first two factors, petitioners observe
that GBI incurred costs to remove, transport, store, and crush
the unusable materials. Petitioners argue that the costs which
GBI incurred to remove the unusable materials constituted an
investment in those materials that was more proprietary and
meaningful than the investment made by the taxpayers in Parsons
v. Smith, supra. We disagree. As was true in Parsons, GBI’s
sole tangible investment was in movable equipment, and GBI
recovered that investment through depreciation. Whereas
petitioners focus primarily on GBI’s labor and other nontangible
property costs in arguing that GBI’s investment was more
proprietary and meaningful than the investment made by the
taxpayers in Parsons, the fact of the matter is that the
taxpayers in Parsons incurred similar nontangible property
(labor) costs. The Supreme Court did not find that those labor
costs in Parsons constituted an economic interest in the coal,
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