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partnership's return for the 1986 taxable year was due on
or before April 15, 1987. See sec. 1.6031-1(e)(2), Income
Tax Regs. The return was filed at that time with no
extensions. Accordingly, in this case the tax matters
partner must demonstrate that the partnership paid the
2,000 shares of Saztec stock to the trust on or before
April 15, 1987.
For purposes of section 404(a)(1) and (6), the terms
"paid" and "payment" mean that all taxpayers, regardless of
their method of accounting, must pay cash or its equivalent
within the statutory deadline in order to qualify for the
section 404(a) deduction. See Don E. Williams Co. v.
Commissioner, 429 U.S. 569, 579 (1977). In the Don E.
Williams Co. case, the Court explained:
The statutory items "paid" and "payment," coupled
with the grace period and the legislative
history's reference to "paid" and "actually
paid," demonstrate that, regardless of the method
of accounting, all taxpayers must pay out cash or
its equivalent by the end of the grace period in
order to qualify for the � 404(a) deduction.
This accords, also, with the apparent policy
behind the statutory provision, namely, that an
objective outlay-of-assets test would insure the
integrity of the employees' plan and insure the
full advantage of any contribution which entitles
the employer to a tax benefit. [Id. at 578-579.]
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