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Cir v. Indianapolis P & L, 493 U.S. 203 (1990)
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General SummaryThis case is from a collection containing the full text of over 16,000 Supreme Court cases from 1793 to the present. The body of Supreme Court decisions are, effectively, the final interpretation of the Constitution. Only an amendment to the Constitution can permanently overturn an interpretation and this has happened only four times in American history.
Cir v. Indianapolis P & L, 493 U.S. 203 (1990)
Commissioner of Internal Revenue v. Indianapolis Power & Light Company No. 88-1319 Argued Oct. 31, 1989 Decided Jan. 9, 1990 493 U.S. 203
CERTIORARI TO THE UDNITED STATES COURT OF APPEALS FOR
THE SEVENTH CIRCUIT
Syllabus
Respondent Indianapolis Power and Light Co. (IPL), a regulated Indiana utility and an accrual-basis taxpayer, requires customers having suspect credit to make deposits with it to assure prompt payment of future electric bills. Prior to termination of service, customers who satisfy a credit test can obtain a refund of their deposits or can choose to have the amount applied against future bills. Although the deposits are at all times subject to the company’s unfettered use and control, IPL does not treat them as income at the time of receipt, but carries them on its books as current liabilities. Upon audit of IPL’s returns for the tax years at issue, petitioner Commissioner of Internal Revenue asserted deficiencies, claiming that the deposits are advance payments for electricity and therefore are taxable to IPL in the year of receipt. The Tax Court ruled in favor of IPL on its petition for redetermination, holding that the deposits’ principal purpose is to serve as security rather than as prepayment of income. The Court of Appeals affirmed.
Held: The customer deposits are not advance payments for electricity, and therefore do not constitute taxable income to IPL upon receipt. Although IPL derives some economic benefit from the deposits, it does not have the requisite "complete dominion" over them at the time they are made, the crucial point for determining taxable income. IPL has an obligation to repay the deposits upon termination of service or satisfaction of the credit test. Moreover, a customer submitting a deposit makes no commitment to purchase any electricity at all. Thus, while deposits eventually may be used to pay for electricity by virtue of customer default or choice, IPL’s right to retain them at the time they are made is contingent upon events outside its control. This construction is consistent with the Tax Court’s longstanding treatment of sums deposited to secure a tenant’s performance of a lease agreement, perhaps the closest analogy to the present situation. Pp. 207-214.
857 F.2d 1162 (C.A.7 1988), affirmed.
BLACKMUN, J., delivered the opinion for a unanimous Court.
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Chicago: U.S. Supreme Court, "Syllabus," Cir v. Indianapolis P & L, 493 U.S. 203 (1990) in 493 U.S. 203 493 U.S. 204. Original Sources, accessed November 25, 2024, http://originalsources.com/Document.aspx?DocID=A8787BW4U84MCRQ.
MLA: U.S. Supreme Court. "Syllabus." Cir v. Indianapolis P & L, 493 U.S. 203 (1990), in 493 U.S. 203, page 493 U.S. 204. Original Sources. 25 Nov. 2024. http://originalsources.com/Document.aspx?DocID=A8787BW4U84MCRQ.
Harvard: U.S. Supreme Court, 'Syllabus' in Cir v. Indianapolis P & L, 493 U.S. 203 (1990). cited in 1990, 493 U.S. 203, pp.493 U.S. 204. Original Sources, retrieved 25 November 2024, from http://originalsources.com/Document.aspx?DocID=A8787BW4U84MCRQ.
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