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and we do not consider the similar costs here to give GBI an
economic interest in the unusable materials. These two factors
favor respondent.
The third factor favors petitioners. Unlike the contracts
in Parsons, GBI’s contracts were not terminable at will. GBI’s
contracts required GBI to perform its services within a set
period of time and provided that GBI was liable for liquidated
damages in the event of a breach. Under the facts at hand,
however, the probative value of this third factor is minimal
given our conclusion supra that the first two factors favor
respondent and our conclusion infra that the remaining four
factors also favor respondent.
As to the fourth factor, petitioners focus on the fact that
the owners in Parsons never surrendered to the taxpayers an
interest in the minerals at issue there. Here, petitioners
observe, GBI obtained title over the unusable materials when they
were declared as such by the engineer. Petitioners assert that
the fact that GBI had to dispose of the unusable materials also
evidences its economic interest in those materials. Petitioners
conclude that this factor favors them. We disagree. Under the
applicable regulations, petitioners’ focus should properly be
placed on any interest that GBI had in the unusable materials
when the materials were embedded in the ground. Sec.
1.611-1(b)(1), Income Tax Regs. Contrary to petitioners’
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