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Contributions made by the employer to a plan of
deferred compensation to the extent that, before
the application of the section 415 limitations to
that plan, the contributions are not includible in
the gross income of the employee for the taxable
year in which contributed.
Furthermore, section 1.401(k)-1(a)(4)(ii), Income Tax Regs.,
provides:
(ii) Treatment of elective contributions as employer
contributions. Except as provided in paragraph (f) of
this section, [dealing with the correction of excess
contributions] elective contributions under a qualified
cash or deferred arrangement are treated as employer
contributions. Thus, for example, elective contributions
are treated as employer contributions for purposes of
sections 401(a) and 401(k), 402, 404, 409, 411, 412, 415,
416, and 417.
The issue in respect of elective deferrals has been before
this Court under substantially identical circumstances. See
Howard E. Clendenen, Inc. v. Commissioner, T.C. Memo. 1998-318;
Steel Balls, Inc. v. Commissioner, T.C. Memo. 1995-266, affd. per
curiam without published opinion 89 F.3d 841 (8th Cir. 1996).8
We rejected the same arguments presented herein and concluded
that respondent's position was clearly supported by the statute
8The Small Business Job Protection Act of 1996, Pub. L. 104-
188, sec. 1434(a), 110 Stat. 1807, added sec. 415(c)(3)(D) which
includes certain deferrals in participant's compensation,
effective for years beginning after Dec. 31, 1997. This
amendment does not apply to the instant case. We note, however,
that the legislative history makes clear that Congress considered
the provisions of the then-existing law as requiring the result
reached herein and specifically intended to change the law for
future years. See H. Rept. 104-586 at 112 (1996), 1996-3 C.B.
331, 450; S. Rept. 104-281 at 80 (1996); H. Conf. Rept. 104-737
at 245-246 (1996), 1996-3 C.B. 741, 985-986.
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