- 3 -
2. Funding the Postretirement Medical Trust for 1992-
94 ........................ 12
3. Mercer’s Actuarial Assumptions for the 1991-94
Contributions to the Postretirement Medical Trust . 13
4. Contributions to the Postretirement Medical Trust . 15
E. Respondent’s Determinations ............... 15
OPINION ........................... 15
A. Statutory Framework: Sections 419 and 419A ...... 15
B. Method for Computing the Account Limit With Respect to a
Reserve ........................ 17
1. Actuarial Cost Methods .............. 18
a. Aggregate Cost Method ............ 20
b. Entry Age Normal Cost Method ......... 20
c. Individual Level Premium Cost Method ..... 21
2. Computations by the Experts ............ 22
a. Mr. Cohen .................. 22
b. Mr. Scharmer ................. 23
c. Mr. Daskais ................. 25
3. Positions of the Parties ............. 33
4. Statutory Construction .............. 34
5. The Statute .................... 35
a. Reserve ................... 36
b. Reserve Funded Over the Working Lives of the
Covered Employees and Actuarially Determined
on a Level Basis ............... 39
(i) Reserve Funded Over the Working Lives of
the Covered Employees .......... 40
(ii) Reserve Actuarially Determined on a Level
Basis .................. 46
C. Investment Rates .................... 51
JACOBS, Judge: Respondent determined deficiencies in Federal
income tax and accuracy-related penalties with regard to
petitioners’ consolidated returns for 1990-94 as follows:
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