- 49 -
comparison of the plans at issue in the instant case to the plan
in I.T. 3956, supra, despite some shared characteristics.
In I.T. 3956, supra, a calendar year employer negotiated a
vacation pay plan for its union employees pursuant to which
eligible employees received a vacation entitlement on January 1
if they had worked 160 days in the preceding calendar year. The
employer sought to deduct the vacation entitlement in the year in
which the 160 days had been worked. The agreement further
provided that vacations could be scheduled from January 1 to
December 31, and that vacation pay was calculated using an
employee's rate of pay at the time the vacation was actually
taken. Moreover, no vacation with pay was due an employee whose
employment relationship terminated prior to his scheduled
vacation period.
I.T. 3956 concerned the accrual and deduction of vacation
pay where the service requirements had already been fulfilled
during the preceding calendar year, but where other provisions
(such as termination of employment) could lead to the forfeiture
of the earned leave. See Latrobe Steel Co. v. Commissioner, 62
T.C. 456, 465 (1974); Oberman Manufacturing Co. v. Commissioner,
47 T.C. 471, 477 (1967); Denver & Rio Grande W. R.R. v.
Commissioner, 38 T.C. at 574. Although employees potentially had
to remain employed well after the year of deduction to prevent a
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