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tax-free asset accumulation. The subject VEBA’s were not
designed, marketed, purchased, or sold as a means for an employer
to provide welfare benefits to its employees. Cf. Booth v.
Commissioner, 108 T.C. 524, 561-563 (1997) (designers of welfare
benefit funds intended to provide employees with real welfare
benefits that would not be subject to abuse). The small business
owners at bar (namely, the petitioning physicians) invested in
the VEBA’s through their businesses and caused their businesses
to purchase the C-group product from the insurance salesmen. The
insurance salesmen, guided by the designer of the C-group
product, represented to the physicians that favorable tax
consequences would flow from an investment in the VEBA’s and the
purchase of the C-group product.
Before turning to the issues at hand, we pause to pass on
our perception of the trial witnesses. We observe the candor,
sincerity, and demeanor of each witness in order to evaluate his
or her testimony and assign it weight for the primary purpose of
finding disputed facts. We determine the credibility of each
witness, weigh each piece of evidence, draw appropriate
inferences, and choose between conflicting inferences in finding
the facts of a case. The mere fact that one party presents
unopposed testimony on his or her behalf does not necessarily
mean that the elicited testimony will result in a finding of fact
in that party’s favor. We will not accept the testimony of
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