A.C. Green Electrical Contractors, Inc. - Page 7

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               On the basis of respondent's determination that Rozenblatt             
          and Jakubowicz were entitled to receive only reduced joint and              
          100-percent survivor annuities and after several other                      
          adjustments not relevant herein, respondent disallowed as excess            
          contributions for 1987, 1988, and 1989, respectively, $177,505,             
          $177,760, and $175,454 of the total claimed deductions relating             
          to the plans.                                                               
               Also, for 1988, 1989, and 1990, respondent determined that             
          petitioner was liable for excise taxes under section 4972 with              
          regard to the portion of petitioner’s contributions to the plans            
          that, in respondent's view, constituted excess contributions.               

          Discussion                                                                  
               Generally, employers may deduct contributions to qualified             
          pension plans that fund retirement benefits for plan                        
          participants.  Sec. 404(a)(1)(A).  Such contributions, however,             
          for Federal income tax purposes, are deductible by employers only           
          to the extent contributions to the plans do not exceed the                  
          actuarially projected costs of funding benefits provided under              
          the plans.  Sec. 1.404(a)-3(b), Income Tax Regs.  Section                   
          1.404(a)-3(b), Income Tax Regs., provides:  "In no event shall              
          costs for the purpose of section 404(a)(1) exceed costs based on            
          assumptions and methods which are reasonable in view of the                 
          provisions and coverage of the plan".                                       






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