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Automobile Association v. United States, 367 U.S. 687 (1961).
Petitioner, thus, cannot simply rely on the consistency of its
tax accounting with its bookkeeping as a sufficient basis for
upholding its treatment of income.
In considering the tax treatment of deposits, the Supreme
Court has held:
Whether these payments constitute income when received,
however, depends on the parties' rights and obligations
at the time the payments are made. * * * Whether these
customer deposits are the economic equivalents of
advance payments, and therefore taxable upon receipt,
must be determined by examining the relationship
between the parties at the time of the deposit. The
individual who makes an advance payment retains no
right to insist upon the return of the funds; so long
as the recipient fulfills the terms of the bargain, the
money is its to keep. The customer who submits a
deposit to the [taxpayer] * * * retains the right to
insist upon repayment * * * and the [taxpayer]
therefore acquires no unfettered "dominion" over the
money at the time of receipt.
Commissioner v. Indianapolis Power & Light Co., 493 U.S. 203,
211-212 (1990) (emphasis in original). The taxpayer's
unrestricted use of the funds is not dispositive. Id. at 209-
210; Oak Industries, Inc. v. Commissioner, 96 T.C. 559, 570
(1991). Whether the taxpayer pays or accrues interest on the
depositor's behalf is not a controlling factor. Id. at 571.
"The key is whether the taxpayer has some guarantee that he will
be allowed to keep the money." Commissioner v. Indianapolis
Power & Light Co., supra at 210.
In Indianapolis Power & Light, the taxpayer required
customers with suspect credit to deposit an amount equal to twice
the customer's estimated monthly utility bill to insure prompt
payment of their bills. These deposits were refundable upon the
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