109 T.C. No. 9
UNITED STATES TAX COURT
SQUARE D COMPANY AND SUBSIDIARIES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 15047-94, 4991-95. Filed October 9, 1997.
During December 1982, P established a voluntary
employees' beneficiary association (VEBA) which
qualified for exemption under sec. 501(c)(9), I.R.C.,
and as a welfare benefit fund (WBF) under sec. 419(e),
I.R.C. During the initial years of the VEBA, P
contributed amounts to the VEBA to provide certain
employee welfare benefits and for claims which were
incurred but unpaid (CIBU's) at yearend. During 1985,
P changed its VEBA yearend to Nov. 30, while P retained
a calendar yearend. Also during 1985, P began
prefunding for benefits the VEBA was expected to
provide in later years.
1. Held, P is not automatically entitled to the
safe harbor percentages of sec. 419A(c)(5)(B)(i) and
(ii), I.R.C., in computing additions to its account
limit for CIBU's for the taxable years 1986 and 1987.
General Signal Corp. & Subs. v. Commissioner, 103 T.C.
216 (1994), followed.
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