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scenario noted in Johnson v. Commissioner, supra at 471, as a
hallmark of those refundable receipts clearly within the
reasoning of Commissioner v. Indianapolis Power & Light Co.,
supra. On account of the open-ended, “at any time”, nature of
the cancellation right, petitioner’s opportunity to perform the
designated services and in fact earn the preneed funds (thereby
eliminating the cancellation right) was contingent upon the later
choice of the decedent’s survivors or representative actually to
call upon petitioner to act under the contract.
The mere execution of a preneed contract did not place
petitioner in a position to fulfill the terms of the bargain. As
a practical matter, because the ultimate decision to purchase
frequently rested in the hands of third parties, there existed in
these situations what more closely resembles a condition
precedent to petitioner’s right to perform than a condition
subsequent that would eliminate a current right to so act. See
Charles Schwab Corp. & Subs. v. Commissioner, 107 T.C. 282, 293
(1996) (distinguishing conditions precedent and subsequent in the
context of income accrual), affd. 161 F.3d 1231 (9th Cir. 1998).
The Court is satisfied that the totality of the unique
circumstances of petitioner’s business brings it within the
rationale of Commissioner v. Indianapolis Power & Light Co.,
supra, and its progeny. We hold that the amounts received by
petitioner under these preneed funeral contracts are includable
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