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Petitioner is a funeral home located at all relevant times
in New Bedford, Massachusetts. Petitioner began operations in
1963 as a partnership and was incorporated under the laws of the
Commonwealth of Massachusetts on September 19, 1967. Brothers
Thomas Perry and William Perry each own a 50-percent interest in
petitioner and are funeral directors licensed by the Commonwealth
of Massachusetts.
Petitioner’s Operations
Prior to and during the years in issue, petitioner entered
into preneed funeral contracts. Under these arrangements, the
contract purchaser selected, on a prospective basis, the goods
and services to be provided by petitioner at the contract
beneficiary’s death. Petitioner would designate the selected
items and applicable charges on a written form.
If the resultant balance was then paid in advance of death,
either in a lump sum or in installments, petitioner agreed to
honor the contract at death as written, without additional cost
to the purchaser or family. If the resultant balance was to be
paid through the proceeds of an insurance policy or was left
unfunded, the amount due would be recalculated in accordance with
the prices in effect at the time of death.
The written form used by petitioner for these purposes was
not specific to prearranged funerals and contained no express
provisions regarding the use or refundability of amounts received
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