Waterfall Farms, Inc. - Page 15

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          consideration to the record before us, we conclude that Waterfall           
          Farms’ medical reimbursement plan satisfies both the “plan” and             
          “for employees” requirements of section 105(e).                             
               Section 1.105-5(a), Income Tax Regs., provides guidelines as           
          to what constitutes an accident or health plan.  A plan may cover           
          one or more employees, and different plans may be established for           
          different employees or classes of employees.  Id.  Income Tax               
          Regs.  The regulations do not require that there be a written               
          plan or that there be enforceable employee rights under the plan,           
          so long as the participant has notice or knowledge of the plan.             
          Wigutow v. Commissioner, T.C. Memo. 1983-620.                               
               In the instant case, a plan (as defined in section                     
          1.105-5(a), Income Tax Regs.) existed.  Waterfall Farms adopted a           
          written medical reimbursement plan identifying who was eligible             
          to participate, what expenses would be reimbursed, and how                  
          participants were to make claims for reimbursement.  The plan was           
          adopted at the first meeting of the board of directors.                     
               Mr. Huber had knowledge of the medical reimbursement plan.             
          Moreover, the medical reimbursements provided under the written             
          plan included reimbursement for all “medical care” costs                    
          deductible on Form 1040, which includes health insurance costs.             
          Sec. 213(d)(1)(D).  And finally, we are satisfied that the                  
          corporation’s medical plan was for Mr. Huber as an employee of              








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