Neonatology Associates, P.A., et al - Page 65




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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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