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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,
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