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1.419A-2T, Temporary Income Tax Regs., 50 Fed. Reg. 27428
(July 3, 1985).
Postretirement Benefits
Section 419A(c)(2) provides for an additional reserve for
postretirement medical and life insurance benefits:
(2) Additional reserve for post-
retirement medical and life insurance
benefits.--The account limit for any taxable
year may include a reserve funded over the
working lives of the covered employees and
actuarially determined on a level basis
(using assumptions that are reasonable in the
aggregate) as necessary for--
(A) post-retirement medical
benefits to be provided to covered
employees (determined on the basis
of current medical costs), or
(B) post-retirement life
insurance benefits to be provided
to covered employees.
Petitioner included $10,779,650 in its 1987 contribution for
postretirement benefits for retirees. The 1987 contribution
included $16,133,508 for postretirement benefits for active
employees. Respondent disallowed the deduction of these
contributions on petitioner’s fiscal 1987 Federal income tax
return.
Petitioner argues that section 419A(c)(2) allows a reserve
funded over the working lives of covered employees for
postretirement benefits to be included in the account limit
without requiring that specific assets be set aside or that a
separate account be created. Petitioner contends that the
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