- 41 -
843; Bell Fed. Sav. & Loan Association v. Commissioner, 40 F.3d
224 (7th Cir. 1994), revg. T.C. Memo. 1991-368.
3. Legislative Intent
Sections 419 and 419(A) were enacted as part of DEFRA, which
made these sections effective for contributions paid or accrued
after December 31, 1985, in taxable years ending after December
31, 1985. Speaking to the special grant of regulatory authority
in section 419(e)(3)(C), with respect to the definition of
"fund", the conference committee report states:
In prescribing regulations relating to the definition
of the term "fund," the conferees wish to emphasize
that the principal purpose of this provision of the
bill is to prevent employers from taking premature
deductions, for expenses which have not yet been
incurred, by interposing an intermediary organization
which holds assets which are used to provide benefits
to the employees of the employer. * * * [H. Conf.
Rept. 98-861, at 1155 (1984), 1984-3 C.B. (Vol. 2) 1,
409; emphasis added.]
Although the foregoing portion of the legislative history
specifically deals with section 419(e), it demonstrates that
Congress was primarily concerned with preventing employers from
accelerating deductions prior to their being incurred. General
Signal Corp. & Subs. v. Commissioner, 103 T.C. at 243. As stated
above, prior to the enactment of DEFRA, an employer generally
could deduct a contribution to a WBF in the year it was made or
accrued even though the corresponding benefits were not
includable in the income of the recipient until a later year. H.
Conf. Rept. 98-861, supra at 1154, 1984-3 C.B. (Vol. 2) at 408;
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