Square D Company and Subsidiaries - Page 3

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          the parties' cross-motions for partial summary judgment.  We must           
          decide whether petitioner's contribution to its trust created as            
          part of its voluntary employees' beneficiary association (VEBA)             
          plan for the 1986 taxable year is deductible.  Specifically, we             
          must decide:  (1) Whether petitioner is entitled to the safe                
          harbor limits of section 419A(c)(5)(B)(i) and (ii)1 in computing            
          the addition to the qualified asset account for medical, dental,            
          and short-term disability (also referred to as accident and                 
          sickness) benefit claims and associated administrative costs                
          pursuant to section 419A(c)(1); (2) whether petitioner's $27                
          million contribution to its VEBA trust during 1986 constituted "a           
          reserve funded over the working lives of the covered employees"             
          for postretirement medical benefits (PRMB's) within the meaning             
          of section 419A(c)(2); and (3) whether the limitation of section            
          1.419-1T, Q&A-5(b)(1), Temporary Income Tax Regs., 51 Fed. Reg.             
          4324 (Feb. 4, 1986), is valid.                                              
                                     Background                                       
               Some of the facts and certain exhibits have been stipulated            
          by the parties for the purpose of the instant motion.  The                  
          stipulation of facts is incorporated in this Opinion by                     
          reference.  When its petition was filed, petitioner's principal             
          office was located in Palatine, Illinois.  Petitioner is a                  


          1    All Code and section references are to the Internal Revenue            
          Code in effect for the year at issue.  All Rule references are to           
          the Tax Court Rules of Practice and Procedure.                              




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