James S. & Denise D. Goodfellow, Daniel R. & Claudia Goodfellow, James B. & Nancy B. Goodfellow - Page 13




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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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