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matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98
T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994);
Colestock v. Commissioner, 102 T.C. 380, 381 (1994). In the
instant case, each party has moved for partial summary judgment.
Neither party argues that there is any material issue of fact
remaining if we decide the three issues in the manner in which we
do.
Legal Framework
In sections 419 and 419A, enacted as part of the Deficit
Reduction Act of 1984 (DEFRA), Pub. L. 98-369, 98 Stat. 494,
Congress limited the deductibility of contributions to welfare
benefit funds (WBF's) in order to restrict an employer from
taking a current deduction for welfare benefits to be provided in
the future. Section 419 provides, in relevant part, the
following:
SEC. 419. TREATMENT OF FUNDED WELFARE BENEFIT PLANS.
(a) General Rule.--Contributions paid or accrued by an
employer to a welfare benefit fund--
(1) shall not be deductible under this chapter,
but
(2) if they would otherwise be deductible, shall
(subject to the limitation of subsection (b)) be
deductible under this section for the taxable year in
which paid.
(b) Limitation.--The amount of the deduction allowable
under subsection (a)(2) for any taxable year shall not
exceed the welfare benefit fund's qualified cost for the
taxable year.
(c) Qualified Cost.--For purposes of this section--
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