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an employer to a deferred compensation plan, section 404 applies
and preempts the deductibility of such contributions under any
other section.7 Section 404(a) provides:
If contributions are paid by an employer to or under a
stock bonus, pension, profit-sharing, or annuity plan,
or if compensation is paid or accrued on account of any
employee under a plan deferring the receipt of such
compensation, such contributions or compensation shall
not be deductible under this chapter; but, if they
would otherwise be deductible, they shall be deductible
under this section, subject, however, to the following
limitations as to the amounts deductible in any year *
* *
As applicable, section 404(a)(1)(A) places generally the
deductible limit on contributions at the amount necessary to
satisfy the full funding standard provided by section 412(a).
The pre-emptive nature of section 404 as to plan contributions is
further clarified by section 1.162-10(a), Income Tax Regs., which
provides that no deduction is allowed under section 162 if the
amounts are used to provide benefits under a deferred
compensation plan.
7The predecessor to sec. 404 first appeared in the Code as
sec. 23(p) of the Revenue Act of 1928, ch. 852, 45 Stat. 791,
799-802. Before adoption of the Revenue Act of 1942, ch. 619, 56
Stat. 798, contributions made to employees' deferred compensation
funds could be deducted either as "ordinary and necessary"
business expenses under sec. 23(a) (the predecessor to sec. 162),
or under the specific provisions for such deductions under sec.
23(p). See sec. 23(p) (1939); Tavannes Watch Co. v.
Commissioner, 176 F.2d 211 (2d Cir. 1949), revg. 10 T.C. 544
(1948). The Revenue Act of 1942 amended sec. 23(p), making it
the exclusive section under which deductions for contributions to
deferred compensation plans could be claimed. See ch. 619, 56
Stat. 798, 863.
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