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distributing corporations cannot deduct those payments.31 The
fact that neither Lakewood nor Neonatology formally declared
these excess contributions as cash distributions does not
foreclose our finding that the excess contributions were
distributions-in-fact. See Commissioner v. Makransky, supra at
601; Truesdell v. Commissioner, supra at 1295; see also Loftin &
Woodard, Inc. v. United States, 577 F.2d 1206, 1214 (5th Cir.
1978); Crosby v. United States, 496 F.2d 1384, 1388 (5th Cir.
1974); Noble v. Commissioner, 368 F.2d 439, 442 (9th Cir. 1966),
affg. T.C. Memo. 1965-84. What is critical to our conclusion is
that the excess contributions made by Neonatology and Lakewood
conferred an economic benefit on their employee/owners for the
primary (if not sole) benefit of those employee/owners, that the
excess contributions constituted a distribution of cash rather
than a payment of an ordinary and necessary business expense, and
that neither Neonatology nor Lakewood expected any repayment of
the cash underlying the conferred benefit.32 See Noble v.
31 In addition to the deeply ingrained principle that a
corporation may not deduct a distribution made to its
shareholder, the subject distributions neither funded a plan
benefit nor are viewed as passing directly from the corporation
to the plan. See Enoch v. Commissioner, 57 T.C. 781, 793 (1972)
(distributions deemed to have passed from the distributing
corporation to the recipient shareholder and then to the third-
party actual recipient).
32 That the distributing corporations and/or the
employee/owners may not have intended that the excess
contributions constitute a taxable distribution does not preclude
(continued...)
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