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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 funds
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