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provide current-year life insurance protection.18 Respondent
determined alternatively that the excess contributions were not
deductible under section 404(a)(5); respondent determined that
the Neonatology Plan was not a “welfare benefit fund” under
section 419(e) but a nonqualified plan of deferred compensation
subject to the rules of section 404. Respondent determined as a
second alternative that, assuming the Neonatology Plan is a
“welfare benefit fund”, any deduction of the excess contributions
was precluded by section 419; for this alternative, respondent
determined that the SC VEBA was not a “10-or-more employer plan”
under section 419A(f)(6) as asserted by petitioners.
As to the Malls, respondent determined they had “other
income” of $19,374 in 1992 (Neonatology’s adjustment of $23,646
less the 1991 NOL of $4,272) and $19,969 in 1993. Respondent
determined that the other income was either constructive dividend
income under section 301 or nonqualified deferred compensation
under section 402(b). As to the latter position, respondent
determined that Dr. Mall was taxable on the disallowed
18 Although respondent’s determination acknowledges that
Neonatology may deduct any contribution that is attributable to
current-year life insurance protection, respondent has not
determined as to the Neonatology group (or the Lakewood group as
discussed infra) the cost of that current-year protection. As to
the Neonatology group, respondent’s determination merely takes
into account the fact that the Malls recognized P.S. 58 income
for the subject years. As mentioned supra note 17, P.S. 58
income relates to life insurance contracts held in a qualified
pension plan.
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