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apparent under the Star Markets Plan and Acme Markets Plans.
Unlike the General Plan, the Star Markets Plan and Acme Markets
Plans provide no advance leave in the form of leave entitlement
to employees. Rather, employees are not permitted to take any
leave until all of the plans' service requirements are fulfilled.
This occurs, at the earliest, on May 1 (the grant date), which is
3 months after the close of petitioner's taxable year.
Moreover, as with the General Plan, vacation pay benefits
under the Star Markets Plan and Acme Markets Plans are calculated
using an employee's rate of pay at the time the vacation is
actually taken, rather than the rate of pay at the end of the
taxable year.
B. Respondent's Disallowance of Claimed Deductions Does Not
Render Section 463 Meaningless
1. The General Plan
Respondent contests petitioner's inclusion of the General
Plan unused yearend nonvested leave entitlements in its
calculation of vacation pay accruals under section 463 for TYE
8701 and TYE 8801. Petitioner asserts that vacation pay is
earned as of the end of a tax year even if employees must perform
additional services after the end of that year to absolutely fix
an employer's obligation to provide the vacation pay. Petitioner
posits that the fact that an individual employee did not have a
nonforfeitable right to such vacation pay at the close of the
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