Connecticut Mutual Life Insurance Company and Consolidated Subsidiaries - Page 5

                                        - 5 -                                         
          deduction in 1985, and that the VEBA was not liquidated until               
          1998, Mr. Bush estimated that the present value of petitioner's             
          tax savings on December 27, 1985, was $5,455,000.                           
               On December 24, 1985, petitioner established the Connecticut           
          Mutual Life Insurance Company Holiday Pay Plan6 (holiday pay                
          plan), and on December 27, 1985, petitioner established the                 
          Connecticut Mutual Life Insurance Company Employee Welfare                  
          Benefit Trust (referred to herein as VEBA II or VEBA II trust).             
          Petitioner created the trust as a funding medium for its holiday            
          pay plan.  On or about December 27, 1985, petitioner contributed            
          $20 million to the trust and deducted the entire contribution on            
          its 1985 Federal income tax return as an ordinary and necessary             
          business expense.                                                           
               The holiday pay plan and the VEBA II trust essentially                 
          provided for the following:                                                 




               5(...continued)                                                        
          provided that no part of the net earnings of the employer inures            
          (other than through such payments) to the benefit of any private            
          shareholder or individual.  Sec. 501(c)(9).                                 
               On May 13, 1986, petitioner transmitted to the Internal                
          Revenue Service a completed Form 1024 (Application for                      
          Recognition of Exemption Under Section 501(a) or for                        
          Determination Under Section 120) for the VEBA II trust.  On Jan.            
          13, 1988, the IRS recognized the tax-exempt status of the VEBA II           
          trust, determining that it qualified as a voluntary employees'              
          beneficiary association pursuant to sec. 501(c)(9).                         
               6Petitioner amended the holiday pay plan on Dec. 31, 1985.             




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011