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419A(a)(1), and medical benefits, sec. 419A(a)(2), that are
incurred but unpaid. Section 419A(c)(1) provides:
(1) In general.--Except as otherwise
provided in this subsection, the account
limit for any qualified asset account for any
taxable year is the amount reasonably and
actuarially necessary to fund--
(A) claims incurred but unpaid
(as of the close of such taxable
year) for benefits referred to in
subsection (a), and
(B) administrative costs with
respect to such claims.
Petitioner asserts that, in General Signal Corp. & Subs. v.
Commissioner, 103 T.C. 216 (1994), the inclusion of incurred but
unpaid long-term disability claims and union medical benefits in
the account limit was not an issue. Petitioner argues that the
subsequent history of claims supports Dorn’s calculation of these
portions of the 1987 contribution.
Petitioner's contribution for medical benefits for union
members fails to meet the requirement of section 419A(c)(1) that
it fund claims incurred but unpaid as of June 30, 1987. By
petitioner's own admission, the contribution for medical benefits
for union members included expenses estimated to be incurred but
unpaid after June 30, 1987. Assuming, however, that this
contribution had met the above requirement, the contribution
would nonetheless be nondeductible for the reasons discussed
below with respect to long-term disability benefits.
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