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payments constituted refundable deposits not subject to inclusion
in income versus advance payments subject to accrual. As to
petitioners' argument that the theater company did not have
complete dominion over the payments made in 1996 until sometime
in 1997, the test of whether a taxpayer has “complete dominion”
over payments centers on “whether the taxpayer has some guarantee
that he will be allowed to keep the money.” Id. at 210. Indeed,
the Supreme Court remarked that the “individual who makes an
advance payment retains no right to insist upon the return of the
funds; so long as the recipient fulfills the terms of the
bargain, the money is its to keep.” Id. at 212. In evaluating
whether a taxpayer enjoys complete dominion, we look to “the
parties' rights and obligations at the time the payments are
made.” Id. at 211.
Petitioners ignore that when the 1996 payments for the flex
and marketing funds were made, the theater company, under the
agreement, had in essence a guaranty that it could retain the
funds as long as it performed according to the agreement. For
purposes of the accrual method, the theater company's right to
the flex and marketing funds was not contingent on Pepsi's
investigating the theater company's compliance with the agreement
or approving the funds. Therefore, the theater company's
obligation (if any) to repay the funds as a result of not
performing according to the agreement did not convert the funds
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