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The Neonatology Plan and the Lakewood Plan are primarily vehicles
which were designed and serve in operation to distribute surplus
cash surreptitiously (in the form of excess contributions) from
the corporations for the employee/owners’ ultimate use and
benefit. Although the plans did provide term life insurance to
the employee/owners, the excess contributions simply were not
attributable to that current-year protection. The excess
contributions, which represent the lion’s share of the
contributions, were paid to Inter-American, Commonwealth, or
Peoples Security, as the case may be, to be set aside in an
interest-bearing account for credit to the C-group conversion UL
policy, upon conversion thereto, and it was the holders of these
policies (namely, the employee/owners) who benefited from those
excess contributions by way of their ability to participate in
the C-group products.28 We find incredible petitioners’
assertion that the employee/owners of Neonatology and Lakewood,
each of whom is an educated physician, would have caused their
respective corporations to overpay substantially for term life
insurance with no promise or expectation of receiving the excess
27(...continued)
these excess contributions.
28 The distributing corporations (Neonatology and Lakewood),
on the other hand, received little if any benefit from the excess
contributions to the plans.
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