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We hold that, in calculating for each year at issue the
limitation prescribed by section 512(a)(3)(E)(i), that section
does not require that the amount of assets that the Trust set
aside as of the close of each such year be reduced by the amount
of the reserve for post-retirement medical benefits. The parties
agree that for each year at issue the amount of assets that the
Trust set aside to provide for the payment of health care bene-
fits, including reasonable costs of administration directly
connected with providing for the payment of such benefits,
exceeded the account limit, as defined in section 419A(c),
determined without regard to section 419A(f)(6) and without
taking into account the reserve for post-retirement medical
benefits described in section 419A(c)(2)(A). We hold that, in
determining for each year at issue the UBTI of the Trust under
section 512(a)(3)(A), the amount of investment income at issue
that the Trust set aside to provide for the payment of reasonable
costs of administration directly connected with providing for the
payment of health care benefits may not be excluded as exempt
19(...continued)
defined in sec. 419A(c), but also the amount of assets set aside
by the Trust are to be determined without regard to the reserve
for post-retirement medical benefits, we would undermine the
reason set forth in the General Explanation why Congress decided
to require the account limit to exclude any amount with respect
to such a reserve in determining the limitation prescribed by
sec. 512(a)(3)(E)(i). See Staff of Joint Comm. on Taxation,
General Explanation of the Revenue Provisions of the Deficit
Reduction Act of 1984, at 791 (J. Comm. Print 1984).
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