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losses, changes in assumptions, and other similar
items, and be no more rapid than on a level basis over
the remaining working lifetimes of the current
participants (reduced on the basis of reasonable
turnover and mortality assumptions). [H. Conf. Rept.
98-861, supra at 1157, 1984-3 C.B. (Vol. 2) at 411;
emphasis added.]
The legislative history of section 419A thus indicates that an
accumulation of assets, not just a calculation, is intended in a
qualified asset account. See also National Presto Indus., Inc.
v. Commissioner, 104 T.C. 559, 569-574 (1995).
Petitioner made no disclosure of the establishment of
reserves for postretirement benefits in its financial reporting
for its 1987 year. Only those employees involved in the
implementation of the VEBA were informed about the existence of
the VEBA.
A letter signed by petitioner’s treasurer states that the
1987 contribution was expected to be depleted by benefit payments
over the 12 to 18 months following the creation of the VEBA. By
the second month of petitioner’s 1989 year, the 1987 contribution
had been depleted. Petitioner made no contribution during its
1988 year, and, in the following years, petitioner contributed to
the VEBA through monthly contributions approximating the benefits
paid. The ending balance of the VEBA for each of the years 1989
and 1990 was zero. Petitioner’s Form 1024, Application for
Recognition of Exemption, did not indicate the establishment of
reserves. While disclosure is not required by the applicable
Code and regulations, the lack of disclosure, along with
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