-15-
plus an additional amount paid by the third party/purchasers of
crushed rock. We disagree with petitioners’ conclusion. GBI was
paid solely by the landowners under the contracts for excavation
and grading services, and those services included removing the
unusable materials from the sites. The ultimate sale of the
unusable materials was a mere economic advantage that GBI derived
by virtue of the contracts, rather than a dispositive factor in
determining depletion deduction eligibility. See Helvering v.
Bankline Oil Co., 303 U.S. at 367-368; Helvering v. O’Donnell,
303 U.S. at 372; Paragon Jewel Coal Co. v. Commissioner, 380 U.S.
at 634-635; Parsons v. Smith, 359 U.S. at 224. We conclude that
this factor favors respondent.
As to the seventh factor, petitioners observe that the
taxpayers in Parsons were able to look only to the owners for all
sums due under the contracts. Petitioners conclude that this
factor favors them because GBI’s receipt of payment was not
solely from the landowners. Petitioners assert that the costs
which GBI incurred to process the unusable materials into crushed
rock for sale to the third parties were recoverable only from
their sale of the crushed rock. We disagree with petitioners’
conclusion. GBI agreed to excavate and grade the landowners’
land, and those services required GBI to remove all unusable
materials from the sites and to secure any necessary fill. GBI
was able to look only to the landowners for payment for these
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