Neil M. Baizer - Page 9

               A prohibited transaction includes any direct or indirect               
          sale or exchange, or leasing, of any property between a plan and            
          a disqualified person.  Sec. 4975(c)(1)(A).  Section 4975(e)(1)             
          defines "plan" as a trust described in section 401(a) which forms           
          part of a plan.  The parties stipulated that the Plan was a                 
          qualified plan and an exempt trust within the meaning of sections           
          401(a) and 501(a).  A disqualified person includes a fiduciary,             
          or an owner, direct or indirect, of 50 percent or more of the               
          stock of a corporation whose employees are covered by the plan.             
          Sec. 4975(e)(2)(A), (E).  The parties stipulated that petitioner            
          was a "disqualified person" with respect to the Plan, within the            
          meaning of section 4975(e)(2).  A disqualified person also                  
          includes an employer any of whose employees are covered by the              
          plan.  Sec. 4975(e)(2)(C).   Therefore, the Corporation is a                
          disqualified person within the meaning of section 4975(e)(2).               
               The issue is whether the contribution of the accounts                  
          receivable to the Plan constituted a prohibited transaction under           
          section 4975(c)(1).  In Commissioner v. Keystone Consol. Indus.,            
          Inc., 508 U.S. 152, 158 (1993), the Supreme Court analyzed                  
          whether the transfer of property was a "sale or exchange" within            
          the reach of section 4975(c)(1)(A).  The Court held that section            
          4975(c)(1)(A) prohibits the transfer of property in satisfaction            
          of an employer's obligation to fund a qualified defined benefit             
          plan.  Id. at 159.  In construing section 4975(c)(1)(A), the                
          Court accepted the already-settled meaning of the phrase "sale or           

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