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benefit or life insurance (including death benefit) payable
to a retired employee during retirement is fully funded upon
retirement. * * * The conferees intend that the Treasury
Department prescribe rules requiring that the funding of
retiree benefits be based on reasonable and consistently
applied actuarial cost methods * * * [H. Conf. Rept. 98-861,
at 1157 (1984), 1984-3 C.B. (Vol. 2) 1, 411; emphasis
added.]
In General Signal, we concluded that Congress' intent was to
allow for the accumulation of assets to fund certain
postretirement benefits. In the instant case, petitioner has
offered no arguments, beyond those made and rejected in General
Signal Corp. & Subs. v. Commissioner, supra, and Parker-Hannifin
Corp. v. Commissioner, supra, as to whether the language of
section 419A requires an accumulation of funds in order to create
a reserve. Consequently, we hold that such an accumulation of
funds is necessary. Accordingly, we next consider whether such
an accumulation was made.
We consider all of the facts and circumstances in deciding
whether a reserve funded over the working lives of covered
employees for postretirement welfare benefits was created.
General Signal Corp. & Subs. v. Commissioner, supra; Parker-
Hannifin Corp. v. Commissioner, supra.
In General Signal, the taxpayer established its VEBA Trust
to prefund benefit payments it expected to incur in the calendar
year following the year during which the contribution was made.
For contributions to a VEBA made after December 31, 1985, the
employer's deduction was limited to the employer's qualified
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