Daniel E. and Karen A. Harkins - Page 12

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          received in 1996 only after Pepsi performed its investigation in            
          1997 (i.e., only after Pepsi decided to approve payment).                   
               With regard to the marketing funds payment in 1997 for the             
          last half of 1996, petitioners reiterate that under the                     
          agreement, Pepsi had 60 days from the end of 1996 to determine              
          whether the theater company had complied with the performance               
          criteria of the agreement.  Petitioners therefore implicitly                
          argue that only after Pepsi had conducted its review and                    
          established for itself that the theater company was entitled to             
          the funds did the theater company have a fixed right to receive             
          that income.                                                                
               Respondent disagrees with petitioners that the flex and                
          marketing funds paid in 1996 constitute refundable deposits and             
          instead considers the payments as advances subject to accrual in            
          1996.  As to petitioners' other contentions, respondent counters            
          that by the close of 1996, the theater company had performed all            
          outstanding obligations required under the agreement to accrue              
          the marketing funds paid in 1997.  Specifically, respondent                 
          argues that the agreement did not call for a review or                      
          investigation by Pepsi–-it called only for the theater company's            
          IV. Deposits Versus Advances                                                
               In Commissioner v. Indianapolis Power & Light Co., supra,              
          the Supreme Court dealt with the issue of whether certain                   

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