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employees, retirees or disabled employees of the existence of a
reserve within the VEBA Trust for the accumulation of assets,
i.e., the creation of a reserve, for the provision of
postretirement medical benefits. This circumstance also supports
the conclusion that petitioner did not fund or create a reserve.
Petitioner engaged the services of Touche Ross to audit its
VEBA Trust financial statements, but it did not disclose to
Touche Ross the existence of a reserve or liabilities for the
provision of PRMB's. Petitioner, however, did disclose its
reserve for CIBU's, and it was reported on the VEBA Trust's
financial statements.
Although FASB 81 requires disclosure of the funding policies
followed for providing benefits and sets out an example of how a
company could disclose the fact that it funded benefits on the
basis of an accrual over the working lives of the covered
employees, the funding method for the cost of retiree health
coverage that petitioner actually disclosed was that claims would
be expensed as they were incurred. This circumstance is
additional support for the conclusion that petitioner did not
fund a reserve for the provision of PRMB's.
In an attempt to distinguish General Signal Corp. & Subs. v.
Commissioner, 103 T.C. 216 (1994), and Parker-Hannifin Corp. v.
Commissioner, T.C. Memo. 1996-337, from the instant case,
petitioner points out that it established the VEBA Trust in 1982
and used it at all times thereafter to pay employee welfare
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