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Section 413(b)(7) even refers directly to section 404(a): "Each
applicable limitation provided by section 404(a) shall be
determined". As such, sections 404(a) and 413(b)(7) cannot be
read separately. Together, they enable individual employer
contributors to determine their deduction limits in the tenebrous
context of overlapping tax and plan years. Consequently, section
404(a)(6), by its reference to section 404(a)(1) through (3), has
an impact on section 413(b)(7).
Petitioner maintains that, if an individual employer's tax
treatment of its contributions affects the deductibility of all
contributions, administrators and other contributing employers
could never know whether a contribution was in fact deductible.
That would no doubt be true under petitioner's approach, in which
an employer's tax treatment is subject to its unilateral
allocation of grace period contributions. However, such a
problem never arises if an employer contributor premises its
deduction on services performed in its 12-month tax year.
Petitioner argues that the rationale of Airborne Freight
Corp. v. United States, 76 AFTR 2d 95-7497, 96-1 USTC par. 50,004
(W.D. Wash. 1995), should prevail in the instant case. However,
as we noted in Lucky Stores II, the District Court did not
directly confront the question of section 404(a) deduction
limitations. Lucky Stores, Inc., & Subs. v. Commissioner, T.C.
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