- 43 -
Section 404(a)(5), which uses the term "includible", is then
explained by the Senate Finance Committee by using essentially
the same terminology:
The committee provided with respect to nonexempt
trusts that the employer will be allowed a deduction
for his contribution at the time that the employee
recognizes income * * * [S. Rept. 91-552, supra at
123, 1969-3 C.B. at 502; emphasis added.]
The Senate Finance Committee report uses the phrase "required to
recognize" to describe the amount of any deduction under section
83(h). Section 83(h) itself describes the amount of the
deduction as the "amount included" in the gross income of the
employee. The term "recognizes" is used by the Committee to
describe the period in which property "is included" in an
employee's gross income in section 83(h). The term "recognizes"
is also used by the Committee to describe the period in which
income "is includible" by the employee in section 404(a)(5).
Thus, it is reasonable to conclude that the timing provisions of
both sections were intended to refer to the year in which income
is required to be "included" or is "includible" in the employee's
income.
When Congress wants to require actual reporting of gross
income, it knows how to say so. For example, section 1367(b)(1)
provides that:
An amount which is required to be included in the gross
income of a shareholder and shown on his return shall
be taken into account under subparagraph (A) or (B) of
subsection (a)(1) only to the extent such amount is
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