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deduction arising from this payment in the taxable year 1988.
Respondent determined that the 1991 deduction, and hence the
carryback to 1988, was not allowable.
Discussion
Resolution of the question before us involves an analysis of
several interrelated statutory and regulatory provisions which
can only be described as a semantical exercise worthy of Judge
Learned Hand's famous commentary on the complexity of the
Internal Revenue Code, a commentary which has acquired added
significance in the years since it was first articulated.3 As a
consequence, we set forth that analysis in order to bring into
focus the precise question that we must decide, namely, whether
the amounts of the accrued vacation and severance pay were "paid"
when the letter of credit was purchased on March 13, 1992.
Statutory Framework
The parties have stipulated that the purchase of the
irrevocable letter of credit was a transfer under section 83,
resulting in includability of the value of the interest
transferred in the income of the employees as of the date of
3 [T]he words of such an act as the Income Tax * * *
merely dance before my eyes in a meaningless
procession: cross-reference to cross-reference,
exception upon exception * * *. * * * at times I
cannot help recalling a saying of William James about
certain passages of Hegel: that they were no doubt
written with a passion of rationality; but that one
cannot help wondering whether to the reader they have
any significance save that the words are strung
together with syntactical correctness. * * * [Hand,
"Thomas Walter Swan," 57 Yale L.J. 167, 169 (1947).]
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