-9-
Nor did GBI secure through a legal relationship income
derived from the extraction of the unusable materials to which it
looked for a return of capital. The Supreme Court has repeatedly
stated as to this requirement that it is met only where a
taxpayer looks solely to recover capital invested in a mineral
deposit through an extraction of that deposit. Paragon Jewel
Coal Co. v. Commissioner, supra at 635, 638; Commissioner v.
Southwest Exploration Co., supra at 314; Kirby Petroleum Co. v.
Commissioner, supra at 603-604. GBI failed this requirement in
that it received from the landowners substantial remuneration for
the excavation and grading services it performed under the
contracts and did not look solely to recover any capital invested
in the unusable materials from an extraction of those materials.
Nor under the contracts did GBI receive the unusable materials as
compensation for services. Although GBI did in fact realize
income on its sale of the unusable materials, that income was
independent of and merely incidental to GBI’s performance of
services under the contracts. Such an economic advantage
obtained from the contracts does not constitute an economic
3(...continued)
ascertainable amount of the embedded materials as part of the
excavation project. The facts of this case establish clearly
that GBI had no understanding of the amount, if any, of the
unusable materials that it would acquire as part of its contracts
with the landowners. Nor do the facts persuade us that GBI had
agreed to buy any of the unusable materials or that it had
depended on its sale of the unusable materials to recover any of
its capital expended on the excavation project.
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