- 18 -
At the outset, this Court explained that "We have
traditionally analyzed the deductibility of an employer's
contributions to a welfare benefit plan by taking into
consideration, among other things, both the degree of control
which an employer retains over the plan and the degree to which
the employees, as opposed to the employer, are benefited."
Schneider v. Commissioner, supra; see also Weil Clothing Co. v.
Commissioner, 13 T.C. 873, 879-880 (1949). Regarding the first
consideration, we stated that in the context of an employee
benefit plan, an employer does not necessarily retain too much
control when it retains the right to terminate or alter the plan,
so long as the funds in the plan may never revert to or inure to
the benefit of the employer. Schneider v. Commissioner, supra.
Similarly, concerning the second consideration, we stated that
the employer's contributions must directly benefit its employees
rather than the employer.11 With respect to taxpayer
contributions that produce future benefits for the taxpayer, we
stated:
if an expenditure results in a substantial benefit to
the taxpayer, as distinguished from an incidental
benefit, which can be expected to produce returns to
11See Anesthesia Serv. Medical Group, Inc. v. Commissioner,
85 T.C. 1031, 1044-1045 (1985), affd. 825 F.2d 241 (9th Cir.
1987) (holding that a trust established to provide protection
against the malpractice claims of the employer's physician-
employees was concerned primarily with the interests of the
employer, which was jointly and severally liable for the
negligence of its employees).
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011