Ronald D. Weeldreyer and Suzanne Weeldreyer - Page 17

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            Commissioner, T.C. Memo. 1971-238; Smith v. Commissioner, T.C.                              
            Memo. 1970-243; Bogene, Inc. v. Commissioner, T.C. Memo.                                    
            1968-147.                                                                                   
                  Respondent has stipulated that during the years at issue Mr.                          
            Weeldreyer was an employee of Dreyer Farms.  Indeed, Mr.                                    
            Weeldreyer was the corporation’s only employee.  And without Mr.                            
            Weeldreyer’s involvement, Dreyer Farms could not have conducted                             
            its farming operations.                                                                     
                  Mr. Weeldreyer’s compensation for services rendered to                                
            Dreyer Farms was his salary and employee benefits.  Respondent                              
            does not contend that Mr. Weeldreyer received excessive                                     
            compensation.  Indeed, respondent contends that Mr. Weeldreyer                              
            was undercompensated for his services.                                                      
                  Although Mrs. Weeldreyer did not work for Dreyer Farms,                               
            payment of her medical expenses was based on her status as Mr.                              
            Weeldreyer’s spouse.  Likewise, payment of the medical expenses                             
            for the Weeldreyers’ children was based on their status as Mr.                              
            Weeldreyer’s dependents.  The derivative participation of Mr.                               
            Weeldreyer’s spouse and dependents is plainly contemplated both                             
            by the medical plan and by section 105(b).                                                  
                  On the basis of the record before us, we conclude that                                
            medical payments made for the benefit of the Weeldreyers and                                
            their children were made under a plan for employees and not for                             
            shareholders.  Accordingly, during the years at issue, the                                  






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