- 15 - forward a copy of said notice of cancellation to the named trustee of said funeral trust. III. Contentions of the Parties We turn now to the parties’ contentions regarding application of the foregoing rules to petitioner’s situation. Petitioner contends that the payments received pursuant to preneed contracts are not includable in gross income until the underlying funeral goods and services are provided. In support of this assertion, petitioner references three alternative theories for exclusion. Petitioner’s primary argument is that the payments constitute nontaxable deposits under the reasoning of Commissioner v. Indianapolis Power & Light Co., supra. Additionally, petitioner maintains that the amounts at issue should be characterized as trust funds akin to those excluded from income in cases such as Angelus Funeral Home v. Commissioner, supra. Petitioner’s third basis for its treatment of the payments is that even if the amounts are found to be advance payments of income, rather than deposits or trust funds, their deferral is appropriate under the exception established in Artnell Co. v. Commissioner, 400 F.2d 981 (7th Cir. 1968), revg. and remanding 48 T.C. 411 (1967), to the general rule requiring immediate inclusion of advances. With respect to the section 6662 penalty, petitioner argues that the lines of cases cited above provide substantial authority and reasonable cause for taking the position that the fundsPage: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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