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We have applied the objective outlay-of-assets test
in a number of cases. For example, we have held that an
employer's accrual on its books of its liability for a
plan contribution does not constitute "payment" of the
contribution for purposes of section 404(a). See Gillis
v. Commissioner, 63 T.C. 11 (1974). Similarly, we have
held that there was no "payment" under section 404(a)
when an employer merely designated on its books and on
the books of the plan that a portion of a certificate of
deposit belonged to the plan. See Rollar Homes, Inc.
v. Commissioner, T.C. Memo. 1987-166. An employer must
irrevocably set aside the contribution for the plan
or remove the contribution from the employer's direct
control in order to qualify for a deduction under section
404. See Gillis v. Commissioner, supra at 17; Rollar
Homes, Inc. v. Commissioner, supra. In Gillis v.
Commissioner, supra at 17, we stated:
Congress has hedged deductions for deferred
compensation with a host of requirements which
are designed to assure, as a condition to
deductibility, that the funds are irrevocably
set aside for the employee-beneficiaries'
benefit within prescribed periods of time.
Otherwise, the payments might never be made
in cases of insolvency, bankruptcy, or other
unforeseen conditions. * * *
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