Perry Funeral Home, Inc. - Page 16

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          received for preneed contracts were not income or property of               
               In contrast, respondent contends that petitioner obtained              
          dominion and control over the preneed funds at the time of                  
          receipt such that the amounts are properly included in income as            
          advance payments under the all events test.  Respondent further             
          argues that each of the exceptions relied upon by petitioner is             
          inapplicable on these facts.                                                
               Specifically, it is respondent’s position that advance                 
          payments for services to be rendered by the taxpayer are not the            
          equivalent of a refundable security deposit or loan and, hence,             
          are not controlled by the standards set forth in Commissioner v.            
          Indianapolis Power & Light Co., supra.  Second, respondent                  
          emphasizes that petitioner’s control over the funds and the                 
          absence of any contractual or legal restrictions preclude                   
          treating the moneys as in trust.5  Finally, respondent alleges              
          that petitioner cannot qualify for the limited Artnell Co. v.               
          Commissioner, supra, exception to the all events test where there           
          exists no certainty as to when or whether petitioner will perform           
          under the contracts.                                                        
               In connection with the section 6662 penalty, respondent                
          disputes petitioner’s assertions of substantial authority and               

               5 Accordingly, respondent considers Rev. Rul. 87-127, 1987-2           
          C.B. 156, dealing with the treatment of funeral trusts as grantor           
          trusts of the purchaser, inapplicable here.                                 

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