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advance for natural gas”, and that the other language used
in the Settlement Agreement is consistent with a sale of
gas, rather than a loan. Respondent also notes that no
loan documents, such as promissory notes, were executed by
the parties, and no interest was charged on the unrecouped
balance of the payment. Finally, respondent notes that the
treatment of the payment by the parties suggests that it
was an advance payment for the sale of gas and not a loan.
In this regard, respondent points out that Arkla booked the
payment to an account entitled “Gas Purchased In Advance of
Delivery”, an asset account and not a loan account, and
that minutes of a meeting of Malibu’s Board of Directors
state that the payment “constitutes prepayment in advance
for gas to be delivered by Malibu Petroleum, Inc.”
Respondent argues that the payment does not constitute
a loan because “the maker of the payment, Arkla, has no
right to demand a refund of the payment in cash as long as
the recipient of the payment, Malibu, does not terminate
the Gas Contract and maintains certain levels of production
from the wells subject to the Gas Contract.” Respondent
also argues that the cases cited by petitioners, such as
Commissioner v. Indianapolis Power & Light Co., supra, are
“completely inapplicable or clearly distinguishable.”
Respondent notes that Malibu reports income under the
cash receipts and disbursements method of accounting, and
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