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Commissioner, T.C. Memo. 1983-713 (refundable purchase price of
multiyear television service policy contract); J.J. Little & Ives
Co. v. Commissioner, T.C. Memo. 1966-68 (receipts from magazine
sales under contracts entitling purchaser to return for credit
refund); Smith v. Commissioner, T.C. Memo. 1962-128, affd. 324
F.2d 725 (9th Cir. 1963) (gain from sale of restaurants where
buyer entitled to return assets under certain circumstances).
On the other hand, there are numerous precedents upholding
the taxpayer's characterization of a refundable payment as a
deposit in the absence of a binding agreement to apply the sum to
the purchase of specific goods and services. Consolidated-Hammer
Dry Plate & Film Co. v. Commissioner, 317 F.2d 829 (7th Cir.
1963), affg. in part and revg. in part T.C. Memo. 1962-97
(progress payments made under construction contract prior to
final determination of work specifications and amount due for
work); Clinton Hotel Realty Corp. v. Commissioner, 128 F.2d 968,
969, 970 (5th Cir. 1942), revg. 44 B.T.A. 1215 (1941) (lease
security deposits, where "If the only agreement was that it
should apply to the last year's rent, it would of course be rent
paid in advance", but "there were many things to which it might
become applicable besides the * * * [last year's] rent.");
Veenstra & DeHaan Coal Co. v. Commissioner, 11 T.C. 964 (1948)
(customer advances used to buy inventory prior to formation of
definite sale contract).
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