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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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Last modified: May 25, 2011