- 33 -
not merely upon the utility's adherence to its
contractual duties. Under these circumstances, IPL's
dominion over the funds is far less complete than is
ordinarily the case in an advance-payment situation.
* * * * * * *
The customer who submits a deposit to the utility * * *
retains the right to insist upon repayment in cash; he
may choose to apply the money to the purchase of
electricity, but he assumes no obligation to do so, and
the utility therefore acquires no unfettered "dominion"
over the money at the time of receipt. [Commissioner
v. Indianapolis Power & Light Co., supra at 210-212;
fn. ref. omitted.]
In subsequent cases this Court has had occasion to apply the
reasoning of Indianapolis Power & Light to analogous situations.
Oak Indus., Inc. v. Commissioner, 96 T.C. 559 (1991), concerned
the tax treatment of a subscription television operator that
collected a security deposit from all subscribers. Upon
termination of service at any time by either party, if no amounts
were due from the subscriber, the television company was required
to refund the entire deposit. A majority of subscribers chose to
apply at least a portion of the deposit to pay monthly service
charges on their final bill. In holding that the deposits were
not taxable income to the television company, we reasoned that
the subscribers controlled whether the deposit would be refunded
or applied against amounts due for services. The subscriber made
no commitment to purchase a specified amount of services from the
television company, or indeed to purchase any services at all.
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