Beals Bros. Management Corp. - Page 4

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          time employees included the Bealses, Jeffrie Beals, Jack D.                 
          Richard, and Daryl W. Sable.  During MGMT ESOP’s plan year ended            
          June 30, 1988, MFG had 43 employees, 36 of whom were part time              
          and 7 of whom were full time.  The full-time employees were the             
          management officers, Jeffrie Beals, Jack D. Richard, and Daryl W.           
               Respondent argues that the MGMT ESOP failed to meet the                
          requirements of:  (1) Section 401(a)(3) (a plan must satisfy the            
          minimum participation standards of section 410), (2) section                
          401(a)(4) (contributions to and benefits of a plan may not                  
          discriminate in favor of highly compensated employees), and (3)             
          section 415 (contributions may not exceed a certain percentage of           
          compensation.)  Only the first two grounds were mentioned                   
          specifically in the notice of revocation.  Because we agree with            
          respondent that the MGMT ESOP does not meet the requirements of             
          section 401(a)(3) for plan years ended June 30, 1987, and                   
          thereafter, we do not consider the other arguments which                    
          respondent has advanced to support his determination.3                      
          Petitioner bears the burden of going forward and the burden of              
          persuasion in disproving respondent’s determinations.  Rule                 

               3 On brief, petitioner did not address respondent’s argument           
          that MFG and MGMT were members of a controlled group.                       

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