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to characterize the excess contributions as compensation does not
necessarily mean that the payments were compensation in fact.
The facts of this case do not support petitioners’ assertion
that Neonatology and Lakewood had the requisite compensatory
intent when they made the contributions to their plans. We find
nothing in the record, except for petitioners’ assertions on
brief, that would support such a finding. See Rule 143(b)
(statements on brief are not evidence). Indeed, all reliable
evidence points to the contrary conclusion that we reach as to
this issue. On the basis of our review of the record, we are
convinced that the purpose and operation of the Neonatology Plan
and the Lakewood Plan was to serve as a tax-free savings device
for the owner/employees and not, as asserted by petitioners, to
provide solely term life insurance to the covered employees. To
be sure, some of the plans even went so far as to purchase
annuities for designated employee/owners.
2. Lakewood’s Payments Made Outside of Its Plan
Lakewood made payments outside of the Lakewood Plan for
additional life insurance for two of its employees. Lakewood
argues that these payments are deductible in full under section
162(a) as ordinary and necessary business expenses. We disagree.
For the reasons stated above, we hold that these payments are
nondeductible constructive distributions to the extent they did
not fund term life insurance. The payments are deductible to the
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