- 15 - V. Marketing Funds Paid in 1997 We now turn to the issue of whether the marketing funds paid in 1997 (for the last half of 1996) were subject to accrual under the all events test in 1996. As to this payment, petitioners contend that the theater company did not have a fixed right to the marketing funds until Pepsi performed its review of whether the theater company had complied with the agreement (i.e., sometime during the 60 days after the end of 1996). With respect to every calendar year during the term of the agreement, Pepsi agreed to provide the theater company marketing funds based upon the amount of Pepsi products purchased during each respective year. The marketing funds, however, were paid semiannually and due from Pepsi within 60 days after the completion of every 6-month period of each year. The marketing funds related to each year were considered earned under the agreement only if the theater company was in full compliance with the performance requirements listed in the agreement during the entire year.9 Entitlement to the marketing funds, we have already concluded above, was not contingent on Pepsi's approving the marketing funds, even though Pepsi had 60 days from the close 8(...continued) “earned”. 9 We interpret the parties' usage of the word “earned” as addressing when the theater company was entitled to those funds under the agreement and not as a technical term addressing the accrual of income for Federal tax purposes.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011