Reed Smith Shaw & MClay, William J. Smith, Tax Matters Partner - Page 19

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             We have allowed a deduction under section 404(a)(1)                      
             where the employer presented credible evidence that the                  
             contribution had been transferred to a trust account for                 
             the plan.  See Busch v. Commissioner, T.C. Memo. 1983-98,                
             affd. 728 F.2d 945 (7th Cir. 1984).                                      
                  At the outset, we note that none of the shares of                   
             Saztec stock that were owned by the Steins on April 7,                   
             1987, when they executed the contribution agreement and                  
             ratification were ever transferred into the name of the                  
             partnership, into the name of the trust, or into                         
             Mr. Stein's name as trustee of the trust.  In fact, all of               
             the stock in the Steins' Broadcort account, including the                
             Saztec stock, became subject to the standstill agreement                 
             between the Steins and Broadcort and/or Steinberg & Lyman,               
             described above, and in April 1991 were sold by Broadcort.               
             Broadcort then retained the proceeds from the sale of that               
             stock, including all of the Saztec stock owned by the                    
             Steins, when their account was liquidated, until April 1992              
             when Broadcort disbursed part or all of the proceeds to                  
             Mr. Stein in connection with its settlement of the Steins'               
             lawsuit.                                                                 
                  Notwithstanding the above, the tax matters partner                  
             argues that the partnership contributed the stock to the                 








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