- 44 -
take or pay obligation, except through the Release Agree-
ment that Malibu must invoke.
In any event, even if Arkla could refrain from taking
any gas under the Contract, the refund of any unrecouped
balance of the settlement payment requires that "the wells
subject to the Contract substantially deplete." As
mentioned above, that event is not within Arkla's control.
Moreover, we agree with the court in Continental Ill. Corp.
v. Commissioner, 998 F.2d 513, 521 (7th Cir. 1993), affg.
in part and revg. in part T.C. Memo. 1991-66, T.C. Memo.
1989-636, and T.C. Memo. 1988-318, which observed in a
similar case that "income does not cease to be such because
there is some likelihood that the recipient may have to
give it back." In these cases, the possibility that the
wells might become substantially depleted before the
settlement payment is fully recouped may reduce the
certainty of Malibu's income stream, but it does not
convert income into the equivalent of a deposit or a
bailment. See id.
In light of the foregoing,
An appropriate order will
be issued denying petitioners'
motion for summary judgment.
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