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concerning the "Prime Financial Benefits Trust Multiple Employer
Welfare Benefit Plan and Trust".2 (We hereinafter refer to this
"plan" as the Prime Plan and the trust as the Trust.3) Each of
these four groups consists of a closely held corporation and one
or more of its owner/employees. In regard to each group, the
Commissioner of Internal Revenue (the Commissioner or respondent)
determined that the corporation could not deduct the amounts that
it reported as contributions to the Trust and that the
individual(s) had income to the extent that the contributions
benefited him or her (or them). Each petitioner petitioned the
Court to redetermine the Commissioner's determination of the
resulting deficiencies in Federal income tax, penalties, and, in
one case, an addition to tax. Respondent's notices of deficiency
listed the following deficiencies, addition to tax, and
penalties:4
2 We have obtained this name from the underlying trust
agreement, as originally drafted and as later amended on the
first two occasions. The third amended version of the trust
agreement used the name "Prime Financial Benefits Multiple
Employer Welfare Benefit Plan and Trust". The fourth and fifth
amended versions used the name "Prime Financial Multiple Employer
Welfare Benefit Plan and Trust". Our use of the original name
refers to all of these versions.
3 Although we use the word "plan" in the singular to refer
to the Prime Plan, we do not mean to suggest that the Prime Plan
is a single plan. As discussed below, we conclude it is not. We
use the word "plan" merely for clarity and convenience.
4 All of the years refer to the calendar year, except:
(1) N.L. Booth's 1989 and 1990 years refer to its taxable years
ended July 31, 1990 and 1991, respectively, and (2) Systems' 1990
(continued...)
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