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The investment earnings of the VEBA II trust were
distributed from the trust to petitioner to reimburse petitioner
for the amounts of holiday pay it paid to employees. No portion
of the $20 million principal in the VEBA II trust has been
distributed. After 1986, the investment earnings from VEBA II
were insufficient to reimburse petitioner completely for its
holiday pay obligations. During the years 1987 through 1994, the
difference between petitioner's fixed holiday pay obligations
covered by VEBA II and the investment earnings from VEBA II was
supplied from the following sources:
Petitioner’s Holiday
Payments for which it Transfers from
Year Received no Reimbursement VEBA I or III
1987 $214,948
1988 150,845
1989 391,426
1990 $459,140
1991 547,128
1992 550,869 2,100
1993 626,750
1994 161,275
On petitioner's annual statement filed with the State of
Connecticut Insurance Department for 1985, petitioner treated the
$20 million contribution to VEBA II as an expense and charged the
contribution directly to its capital and surplus account. In
1992, petitioner sought and received approval from the State
Insurance Department to report the $20 million principal in VEBA
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