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offending its customers by attempting to prevent their knowledge
and use of the credit balance posted on their accounts.
There existed an implicit recognition on the part of
petitioner and its customers that the customers would be entitled
to have any amounts which they overpaid returned to them.
Additionally, the customers who submitted overpayments had at
their disposal all of the information necessary to determine that
they had in fact overpaid. The invoice which petitioner included
with the product shipment, combined with a record of the
customer’s disbursements, would be sufficient for the customers
to determine that they had a credit balance in their favor with
petitioner. Given that the overpayments resulted from the
conduct of petitioner’s customers as opposed to that of
petitioner, we believe that the level of knowledge which
petitioner’s customers possessed in this case is sufficient to
satisfy the existence of a consensual recognition of petitioner’s
obligation to return the overpayments.6 Accordingly, petitioner
is not required to include in income pursuant to the claim of
right doctrine the amount of the customer credit balances
attributable to customer overpayments which remain outstanding as
of the close of the taxable year.
6 Given this determination, we need not decide whether
there existed a restriction on petitioner’s ability to dispose of
the customer overpayments.
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