- 4 -
listed.
The letter of credit was secured by petitioner's general
assets, and its employees were named as sole beneficiaries
thereunder. Under this arrangement, if petitioner failed to pay
secured vacation benefits, they would be paid by the issuer of
the letter of credit upon the request of the employees' agent,
petitioner's chief financial officer.
Under applicable bankruptcy law, petitioner's general
creditors had no right with respect to payments under the letter
of credit.
The parties have stipulated that the letter of credit
represented a transfer of substantially vested interests in
property to the employees for purposes of section 83, and that
the fair market value of the interests was includable in the
employees' gross incomes for 1992 as of the date the interests
were transferred.2
On its return, timely filed, for the taxable year ending
December 28, 1991, petitioner deducted all liabilities for
vacation and severance pay accrued during that year that were
listed in the letter of credit, in the amount of $2,092,421. By
way of a net operating loss carryback, petitioner also claimed a
2 Although we recognize that this stipulation represents a
conclusion of law that may not be binding upon us, we have found
no reason not to utilize it as an element of decision. See
Godlewski v. Commissioner, 90 T.C. 200, 203 n.5 (1988); Barnette
v. Commissioner, T.C. Memo. 1992-595, affd. without published
opinion 41 F.3d 667 (11th Cir. 1994).
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