-16-
While section 4975 and its corresponding regulations first
look to a rescission of the transaction, a correction may
nevertheless occur even when a rescission is not possible. See
sec. 53.4941(e)-1(c)(3), Foundation Excise Tax Regs. For
example, the transaction could have been "undone" by the Plan's
collection of the assigned accounts receivable. In collecting
the accounts, the Plan would have had cash, which does not have
the same potential for abuse as the accounts receivable.
Petitioner offered no evidence regarding the collection of the
accounts receivable. The parties stipulated that Dorothy Salata
was employed by the Plan to collect the transferred accounts
receivable. However, there was no evidence submitted to
determine any amounts actually collected on the $273,558 accounts
receivable.
Petitioner argues that each participant was paid in full
with the lump-sum equivalent of the participant's benefits, and
thus, there was a correction. According to petitioner, any
payments to the Plan would result in a refund to the corporation,
since the plan participants, Harold Breslow and Robert Levine,
received their full benefit and petitioner signed an irrevocable
waiver of his rights to Plan benefits.
We reject petitioner's argument. Examining the record, we
find no documentary evidence that all rank and file employees
were paid their full vested interest, especially in light of Mr.
Levine's testimony that he did not receive the full present value
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