Connecticut Mutual Life Insurance Company and Consolidated Subsidiaries - Page 14

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          Id. at 87.  The Supreme Court went on to hold that capitalization           
          is also required when the expenditure provides the taxpayer with            
          significant benefits beyond the year in which the expenditure is            
          incurred.  Id. at 87-89.  The Court cautioned, however, that "the           
          mere presence of an incidental future benefit--'some future                 
          aspect'--may not warrant capitalization".  Id. at 87.  Applying             
          these principles to the case at hand, we must inquire into the              
          duration and extent of any benefits that petitioner received as a           
          result of its $20 million contribution to the VEBA II trust in              
          1985.  See Black Hills Corp. v. Commissioner, 73 F.3d 799, 806              
          (8th Cir. 1996), affg. 102 T.C. 505 (1994); A.E. Staley                     
          Manufacturing Co. v. Commissioner, 105 T.C. 166, 194 (1995).                
               Petitioner has provided its employees with fixed paid                  
          holidays for the past 150 years.  This holiday pay was a quid pro           
          quo for the employees' services.  Petitioner's employees were               
          paid for a designated holiday only if they were employed by                 
          petitioner on the working days immediately preceding and                    
          following the holiday.                                                      
               Through its contribution to the VEBA II trust, petitioner              
          effectively prefunded a substantial portion of its anticipated              
          holiday pay obligations for many years to come.  Petitioner's own           
          expert witness, Stanley B. Rossman, opined that petitioner's $20            
          million contribution in 1985 was sufficient to pay holiday pay              
          benefits for 8 to 10 years.  Mr. Rossman assumed that both income           
          and principal from VEBA II would be used to fund the full amount            




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