Neonatology Associates, P.A., et al - Page 74




                                               - 74 -                                                  
            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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