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corporation, standing in its shoes, as an "employer reversion"--a
term that is defined in section 4980(c)(2) as follows:
The term "employer reversion" means the amount of cash
and the fair market value of other property received
(directly or indirectly) by an employer from the
qualified plan. [Emphasis added.]
Then, in his capacity as successor in interest of his employer,
Mr. Souris passed that employer reversion to himself as the
employee pursuant to the 1981 employment agreement. To be sure,
these steps were telescoped into a single payment to Mr. Souris,
who mistakenly reported the reversion in his individual return
rather than amending the corporate returns and then reporting the
same amount as additional compensation on his individual return.
However, Mr. Souris' failure to follow this procedure in separate
steps does not detract from the essence of the situation if we
are to treat the corporation and Mr. Souris as separate taxpaying
entities, as we are required to do.
We conclude that the $171,476 reversion represents
additional compensation (increased bonus) paid by the
corporation. Further, the corporation's income from the law
partnership was equal to the value of Mr. Souris' services, and,
as passed through to him by the corporation, it became the basis
for a deduction by the corporation under section 162(a)(1)4 as "a
4 Sec. 162. Trade or business expenses.
(a) In general.--There shall be allowed as a
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