- 19 - the taxpayer for a period of time in the future, then the expenditure is deemed capital and cannot be currently deducted. See National Starch & Chemical Corp. v. Commissioner, 918 F.2d 426 (3d Cir. 1990), affg. 93 T.C. 67 (1989), cert. granted INDOPCO, Inc. v. Commissioner, 500 U.S. ___, 59 U.S.L.W. 3769 (May 13, 1991). [Schneider v. Commissioner, supra.] Applying these principles to the facts in Schneider v. Commissioner, supra, we determined that the taxpayer was entitled to a deduction pursuant to section 162(a). First, we found that the assets contributed by the employer were held in trust to provide the benefits discussed above, and none of the employee benefit plans allowed for the reversion of assets to the employer in the event the plan was amended or terminated. Second, we found that the employer's contributions to these plans directly benefited its employees and that any future benefit that the employer would derive from its contributions was based solely on the expectation that its employees were more likely to remain loyal and perform to the best of their abilities if their economic needs were satisfied. In our view, such a benefit was only an incidental or indirect benefit, and therefore not controlling. See Weil v. Commissioner, supra at 879-880; Elgin Natl. Watch Co. v. Commissioner, 17 B.T.A. 339, 358 (1929), affd. 66 F.2d 344 (7th Cir. 1933). We also rejected the Commissioner's argument that the taxpayer's contributions were essentially prepaid expenses, which were required to be capitalized. We found that the annualPage: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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