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A claim of right exists when property or funds are received
and treated by a taxpayer as belonging to him. See Healy v.
Commissioner, 345 U.S. 278, 282 (1953). Income received under a
claim of right is taxable in the year of receipt even though the
taxpayer may be required to return it at a later time. See North
Am. Oil Consol. v. Burnet, 286 U.S. 417, 424 (1932). If, in a
subsequent year, the claim to the funds or property is determined
to be invalid, the taxpayer would be entitled to a deduction in
the year of repayment. However, the amount of tax due and
reported in the year of receipt is unaffected by the return of
property or funds. See United States v. Skelly Oil Co., 394 U.S.
678, 680-681 (1969). Property or funds are not received under a
claim of right when there is a substantial restriction on its
disposition or use, or when there is a fixed obligation to return
the property or funds received. See Indianapolis Power & Light
Co., supra at 209; Hope v. Commissioner, 55 T.C. 1020, 1030
(1971), affd. 471 F.2d 738 (3d Cir. 1973).
In Indianapolis Power & Light Co., the Supreme Court dealt
with the issue of whether deposits, paid by customers to assure
the taxpayer of payment for future electricity, were required to
be included in income. The deposits were received by the
taxpayer subject to an express obligation to repay either at the
time service was terminated or at the time a customer established
good credit. So long as a customer fulfilled his legal
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