- 17 -
be taxable on $13,282 ($13,193 + $89) in 1990 and $3,790 ($16,843
- $13,193 + $140) in 1991.
Section 83(e)(2) provides for an exception to the above
rule. Respondent argues that the exception does not apply. The
relevant portion of section 83(e) provides:
(e) Applicability of Section.--This section shall
not apply to--
* * * * * * *
(2) a transfer to or from a trust
described in section 401(a) * * *
Section 401(a) provides, in part:
(a) Requirements for Qualification.--A trust
created or organized in the United States and forming
part of a stock bonus, pension, or profit-sharing plan
of an employer for the exclusive benefit of his
employees or their beneficiaries shall constitute a
qualified trust under this section--
* * * * * * *
(2) if under the trust instrument it is
impossible, at any time prior to the
satisfaction of all liabilities with respect
to employees and their beneficiaries under
the trust, for any part of the corpus or
income to be (within the taxable year or
thereafter) used for, or diverted to,
purposes other than for the exclusive benefit
of his employees or their beneficiaries * * *
Respondent argues that the trusts were in violation of
section 401(a)(2), and the section 83(e)(2) exception therefore
does not apply. Respondent also argues that Mrs. Lozon was not a
"qualified participant" in the plan (a requirement of the pension
plan itself) since she was not an employee. Respondent's
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011