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C. Taxability of Contributions by Allstate to the Plans
1. Petitioners' Arguments
In response to respondent's position that Allstate's
contributions to the plans are includable in Mrs Lozon's gross
income for 1990 and 1991 to the extent the contributions were
vested during those years, petitioners point out that respondent
concedes that the pension plan was qualified under section 401
and the corresponding trust was exempt under section 501(a)
during the years at issue5. Citing section 402(a), petitioners
argue that they should not be taxed until the proceeds are
distributed to them from the pension plan trust since Allstate
treated them as covered under the pension plan. Petitioners
state "A subsequent reclassification of Mrs. Lozon as an
independent contractor had no effect on her participation in the
Plan since she continued to qualify as an agent of Allstate."
Petitioners cite section 401(c) as authority for the
proposition that self-employed persons can be participants of
qualified plans. Petitioners also argue that respondent did not
question the qualification status of plan participants when
contributions were made and that "It would be unjust to find that
such contributions that have not been distributed to
[petitioner], and will not be distributable to her until she
reaches retirement age, is [sic] taxable to her".
5 See infra note 6.
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