Parker-Hannifin Corporation - Page 23

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          reserve limit principles for collectively bargained plans.                  
          Before final regulations were issued, current section                       
          419A(f)(5)(A) was enacted, eliminating the need for such                    
          regulations.  See Tax Reform Act of 1986, Pub. L. 99-514, sec.              
          1851(a)(13), 100 Stat. 2862.                                                
               Respondent argues that petitioner should not be allowed to             
          deduct the portion of the contribution related to collectively              
          bargained employees because a separate fund was not created.                
          This argument arises out of the language of section 419A(f)(5)              
          that refers to any “qualified asset account under a separate                
          welfare benefit fund * * * under a collective bargaining                    
          agreement”.  Emphasis added.  Respondent’s position is that                 
          “separate” means distinct and different from welfare benefits for           
          noncollectively bargained employees.  Because petitioner                    
          commingled the assets that were contributed for collectively                
          bargained employees with those for noncollectively bargained                
          employees, respondent argues that petitioner should not be                  
          allowed to deduct the portion of the 1987 contribution for union            
          medical benefits.                                                           
               Petitioner asserts that the use of “separate” means that the           
          funds in the VEBA should be separate from the general assets of             
          petitioner and beyond the reach of petitioner’s creditors.  Under           
          the terms of the VEBA Trust, such reversion of petitioner’s                 
          contributions was expressly prohibited.                                     






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Last modified: May 25, 2011