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severance pay benefits. Since the benefits provided by the VEBA
were commensurate with the salaries and ages of its members, we
rejected the Commissioner's initial argument that the VEBA was
actually nothing more than a private investment fund created for
the benefit of petitioner's president, Berkley B. Strothman, and
his wife.
In addition, we determined that the Strothmans did not
possess "total unfettered control" over the VEBA's assets,
despite the fact that the Strothmans, via their controlling
interest in the employer-corporation, could effect amendments or
termination of the VEBA. We explained:
"We realize the [employer] could at any time
terminate or alter the plan although the monies of the
trust could never revert to or inure to the
[employer's] benefit. This minimal retention of
control is not sufficient to make the benefits of the
plan in any way illusory. Employers need to retain
rights to alter or terminate plans to meet the changing
needs of the employees and employer. This flexibility
may be required with numerous types of plans including
the medical, vacation and other welfare benefit plans
specified by regulation." * * * [Moser v.
Commissioner, T.C. Memo. 1989-142 (quoting Greensboro
Pathology Associates, P.A. v. United States, 698 F.2d
1196, 1203 n.6 (Fed. Cir. 1982)).]
A critical inquiry, therefore, was whether the funds in the plan
could ever revert to the employer, and this question was
"integrally related" to any analysis of whether the plan was
truly a "welfare or other similar benefit plan" to which
contributions are deductible by employers as ordinary and
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