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interest in the unusable materials. Paragon Jewel Coal Co. v.
Commissioner, supra at 634-635; Parsons v. Smith, 359 U.S. at
224; Helvering v. O’Donnell, 303 U.S. 370, 372 (1938); Helvering
v. Bankline Oil Co., 303 U.S. at 367-368. As the regulations
provide as to this matter, a taxpayer who has no capital
investment in a mineral deposit does not possess an economic
interest in the deposit merely because, through a contractual
relation, the taxpayer obtains an economic or pecuniary advantage
through the production of the deposit. Sec. 1.611-1(b)(1),
Income Tax Regs.; see also Helvering v. Bankline Oil Co., supra
at 367 (“the phrase ‘economic interest’ is not to be taken as
embracing a mere economic advantage derived from production,
through a contractual relation to the owner, by one who has no
capital investment in the mineral deposit.”); cf. Holbrook v.
Commissioner, 65 T.C. 415, 419 (1975) (presence of an economic
interest does not necessarily require a monetary investment in
the mineral deposit in place but requires an element of ownership
in the minerals in place and a right to share in the income from
their production).
Petitioners argue that GBI possessed an economic interest in
the unusable materials under the rationale set forth by the
Supreme Court in Parsons v. Smith, 359 U.S. 215 (1959). We
disagree. In Parsons, the taxpayers were paid by the owners of
coal-bearing land (owners) to strip mine the land and to deliver
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