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In their post-trial briefs, the parties have addressed in
cursory fashion the independent investor test used by the Courts
of Appeals for the Second,10 Seventh,11 and Ninth Circuits.12
In Eberl’s Claim Serv., Inc. v. Commissioner, 249 F.3d 994,
1003-1004 (10th Cir. 2001), affg. T.C. Memo. 1999-211, the Court
of Appeals for the Tenth Circuit recently confirmed that it
continues to use the multifactor approach of Pepsi-Cola Bottling
Co. of Salina, Inc. v. Commissioner, supra. In Eberl’s Claim
Serv., Inc., the panel rejected the taxpayer’s argument for
adoption of some form of the independent investor test (more
fully discussed infra pp. 47-57), stating that it was bound to
continue using the multifactor approach of Pepsi-Cola Bottling
Co. of Salina, Inc., absent reconsideration and adoption in an en
banc rehearing. Id.
In all likelihood, any appeal from our decision in the case
at hand would be to the Court of Appeals for the Tenth Circuit.
Sec. 7482(b)(1)(B). As a result, in deciding this case, we
follow its decisions in Eberl’s Claim Serv., Inc., supra, and
10E.g., Dexsil Corp. v. Commissioner, 147 F.3d 96 (2d Cir.
1998), vacating and remanding T.C. Memo. 1995-135; Rapco, Inc. v.
Commissioner, 85 F.3d 950 (2d Cir. 1996), affg. T.C. Memo. 1995-
128.
11E.g., Exacto Spring Corp. v. Commissioner, 196 F.3d 833
(7th Cir. 1999), revg. T.C. Memo. 1998-220.
12E.g., Labelgraphics, Inc. v. Commissioner, 221 F.3d 1091
(9th Cir. 2000), affg. T.C. Memo. 1998-343; Elliotts, Inc. v.
Commissioner, 716 F.2d 1241 (9th Cir. 1983), revg. and remanding
T.C. Memo. 1980-282.
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