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in section 419A(f)(6).24 The VEBAs’ framework was crafted by the
insurance salesmen mentioned herein and marketed to professional,
small business owners as a viable tax planning device. The
VEBAs’ scheme was subscribed to by varied small businesses whose
employee/owners sought primarily the advertised tax benefits and
24 The term “10-or-more employer plan” is defined by sec.
419A(f)(6), which provides as follows:
(6) Exception for 10-or-More Employer Plans.--
(A) In general.--This subpart [i.e., the
rules of subpt. D that generally limit an
employer’s deduction for its contributions to
a welfare benefit fund to the amount that
would have been deductible had it provided
the benefits directly to its employees] shall
not apply in the case of any welfare benefit
fund which is part of a 10 or more employer
plan. The preceding sentence shall not apply
to any plan which maintains experience-rating
arrangements with respect to individual
employers.
(B) 10 or more employer plan.--For
purposes of subparagraph (A), the term “10 or
more employer plan" means a plan--
(i) to which more than 1
employer contributes, and
(ii) to which no employer
normally contributes more than 10
percent of the total contributions
contributed under the plan by all
employers.
See generally Booth v. Commissioner, 108 T.C. 524, 562-563
(1997), for a discussion of the tax consequences which flow from
a 10-or-more employer plan vis-a-vis another type of welfare
benefit fund, on the one hand, or a plan of deferred
compensation, on the other hand.
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