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Respondent misconstrues the regulation. To restate, section
1.404(a)-3(d), Income Tax Regs., is a clarification of whether
and in what circumstances payment by an employer of plan expenses
is a "contribution", the deduction of which is limited by section
404. It further clarifies that section 162 governs the deduction
of any payments falling outside the reach of section 404. In the
circumstances described in section 1.404(a)-3(d), Income Tax
Regs., section 404 does not limit or restrict expenses that are
otherwise deductible under section 162. There is no requirement
under section 162 that the expense be "recurring in nature" or
related solely to administration, and, in fact, a payment may be
a one-time occurrence and still be ordinary and necessary. See
Commissioner v. Heininger, 320 U.S. 467 (1943); Welch v.
Helvering, supra at 114.
To the extent respondent relies on Rev. Rul. 86-142, 1986-2
C.B. 60, we disagree with the reasoning therein and decline to
adopt that reasoning.11 See Stark v. Commissioner, 86 T.C. 243
(1986) (revenue ruling is not binding on this Court). Respondent
does not argue the regulation is ambiguous or that any particular
11Notwithstanding our holding herein, we do not believe the
result reached in Rev. Rul. 86-142, 1986-2 C.B. 60, would change
because broker's commissions incurred in connection with the
acquisition of securities must be capitalized. See Helvering v.
Winmill, 305 U.S. 79 (1938); sec. 1.263(a)-2(e), Income Tax Regs.
Respondent has not raised the issue of whether the litigation
costs at issue here were capital expenses, and we express no
opinion in this regard.
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