- 11 - II as an asset. Thereafter, petitioner reported the VEBA II trust as an admitted asset on its annual statements. The change in petitioner's annual statement reporting resulted from its desire to change to an accounting practice similar to that adopted in the Statement of Financial Accounting Standards No. 87. VEBA III Subsequent to the establishment of the holiday pay plan and the VEBA II trust, petitioner established a third VEBA trust (VEBA III) in order to fund its wellness program and health services plans. Petitioner contributed $10 million to VEBA III in 1986 but claimed no Federal income tax deduction in the year of contribution.8 In 1991 and 1992, petitioner liquidated VEBA III because of expense problems and capital and surplus management considerations. Petitioner used the funds from VEBA III to pay employee benefits other than those provided under the wellness and health services plans.9 Over $1 million, for instance, was used to fund vacation pay for petitioner's employees. By using the assets of VEBA III to pay employee benefit expenses, petitioner's expenses for the year were reduced, and petitioner was able to maintain surplus growth. 8See infra p. 22. 9Petitioner did not terminate these plans; they remained intact but were unfunded.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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