- 42 -
that petitioner is entitled to the deductions, but they part
company on the proper timing. Respondent contends that the 1987
vacation pay should have been deducted in TYE 8801 and the 1988
vacation pay ought to have been deducted in TYE 8901.
Although the term "earned" is not expressly defined in the
statute or the legislative history, the parties both maintain
that vacation pay is earned if it pertains to services performed
before the close of a taxable year. The gravamen of the dispute,
therefore, lies in whether vacation benefits under the General
Plan, the Star Markets Plan and the Acme Market Plans were in
fact attributable to services performed before the close of the
taxable year for which the deductions were sought.
For reasons which follow, we hold that the vacation benefits
were not earned before the end of each taxable year within the
meaning of section 463. Consequently, the deductions must be
taken in the subsequent taxable years.
A. Vacation Benefits Are Partially Based on Services Performed
After the End of the Taxable Years
1. The General Plan
Petitioner argues that the only service requirement for
receiving leave entitlement under the General Plan is employment
for the 12 consecutive months preceding the grant date.
Respondent, on the other hand, asserts that employees earned
their respective vacation benefits only as services were rendered
Page: Previous 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 NextLast modified: May 25, 2011