29 4. Whether the Purchase Agreements Were for Building, Installing, Constructing, or Manufacturing of Items by Eagle Respondent contends that the payments at issue are not advance payments under section 1.451-5(a)(1)(ii), Income Tax Regs., because Eagle did not build, install, construct, or manufacture the house kits; Timberline did. Petitioner contends that Eagle need not be the manufacturer for the payments to qualify under the regulation. Petitioner points out that Eagle's subcontractor, generally Timberline, manufactured the house kits at Eagle's direction. Petitioner also points out that Eagle's engineers provided design services and produced the blueprints for the house kits. Petitioner cites no credible authority or argument to support his contention that Eagle need not be a manufacturer to qualify under section 1.451-5, Income Tax Regs. Petitioner points out that we held that a taxpayer qualifies under Rev. Proc. 71-21, 1971-2 C.B. 549, for deferral of income from services in a case in which the services were performed by subsidiaries instead of the taxpayer. Barnett Banks, Inc. v. Commissioner, 106 T.C. 103, 104-105, 116-117 (1996). However, there is no indication that the parties in that case raised or that the Court considered the fact that the services were performed by subsidiaries. Petitioner contends that Eagle is a contractor and qualifies under section 1.451-5, Income Tax Regs. We disagree. To qualify under that regulation, the taxpayer must build, construct,Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Next
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