- 10 -
in the absence of corrective action. Martin Fireproofing v.
Commissioner, supra at 1188. The second point is emphasized in
Rev. Rul. 73-79 in which a plan requalified only after amendment
of the plan and a reallocation of contributions made for the
years of violation. Id.
Petitioners also contend that Zabolotny v. Commissioner, 7
F.3d 774 (8th Cir. 1993), affg. and revg. 97 T.C. 385 (1991), is
analogous to their situation and supports their argument. We
disagree. First, Zabolotny involved a different section of the
Code, section 4975.6 Second, section 4975 did not impose a
requirement that a disqualified person must take affirmative
action before a transaction may be “corrected”. Id. at 777. In
the instant case, the applicable regulations and caselaw require
that corrective actions must be taken to requalify a plan that
has violated section 415. Martin Fireproofing v. Commissioner,
supra at 1184; sec. 1.415-6(b)(6), Income Tax Regs.
Petitioners provided calculations to establish that the plan
was qualified as of the taxable year ending June 30, 1987. In
their calculations, petitioners have ignored findings from the
declaratory judgment; i.e., $30,000 treated as an employee
6 Sec. 4975 imposes excise taxes on persons who entered
into “prohibitive transactions” with employee pension and benefit
plans qualified under the Employment Retirement Income Security
Act of 1974 (ERISA), Pub. L. 93-406, 88 Stat. 829. Zabolotny v.
Commissioner, 7 F.3d 774, 776 (8th Cir. 1993), affg. and revg. 97
T.C. 385 (1991).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011