Frank Gant and Roberta Gant - Page 1

                                 T.C. Memo. 1998-440                                  

                               UNITED STATES TAX COURT                                

                     FRANK GANT AND ROBERTA GANT, Petitioners v.                      
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

          Docket No. 17090-95.           Filed December 15, 1998.                     

                    G was the president, the sole shareholder, and a highly           
               compensated employee of O.  O sponsored a defined benefit              
               plan and defined contribution plan for its employees which             
               were both qualified within the meaning of sec. 401(a),                 
               I.R.C.  Ps alleged that O terminated both plans in the June            
               30, 1988, plan year when it adopted a resolution to                    
               terminate the plans immediately and distributed individual             
               annuity contracts to plan participants.  Subsequently, R               
               disqualified both plans for the plan year ended June 30,               
               1991, for, among other reasons, their failure to meet the              
               participation requirements of sec. 401(a)(26), I.R.C.  R               
               determined deficiencies in Ps' Federal income taxes for                
               their 1991, 1992, and 1993 taxable years due to their                  
               failure to include in gross income G's vested accrued                  
               benefit in the Pension Plan in 1991, G's account balance in            
               the Profit Plan in 1991, and accrued benefits under both               
               Plans in 1992 and 1993.                                                
                    1. Held, for purposes of the Internal Revenue Code,               
               strict adherence to the requirements of ERISA sec. 4041 are            

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