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subsequent, which may terminate an existing right to income but
the presence of which does not preclude the accrual of income.
See Keith v. Commissioner, 115 T.C. 605, 617 (2000); Charles
Schwab Corp. & Subs. v. Commissioner, 107 T.C. 282, 293 (1996),
affd. 161 F.3d 1231 (9th Cir. 1998). Having stated the
boundaries of the all events test, we now turn to the parties'
contentions.
III. The Parties' Contentions
As to the flex and marketing funds paid by Pepsi during 1996
(for the first half of 1996) and which the theater company
reported as income on its 1996 tax return, petitioners now argue
that those payments were refundable deposits not subject to
accrual in 1996. Petitioners cite Commissioner v. Indianapolis
Power & Light Co., 493 U.S. 203 (1990), for the proposition that
a taxpayer does not have to accrue payments over which he does
not have complete dominion and that complete dominion occurs only
when the taxpayer has some guaranty of retaining the funds at
issue. Petitioners argue that because the theater company was
obligated to repay the payments for the flex and marketing funds
in the event of a breach by the theater company occurring as late
as “after year end (e.g., March 1997)”, the theater company did
not enjoy complete dominion over the payments during 1996 and
therefore did not have to accrue them. Petitioners contend that
the theater company enjoyed complete dominion over the funds
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