Wells Fargo & Company (f.k.a. Norwest Corporation) and Subsidiaries - Page 15




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                  4.    Contributions to the Postretirement Medical Trust                               
                  In 1991-94, Norwest made contributions to the postretirement                          
            medical trust of $30,689,717, $2,170,000, $13,791,600, and                                  
            $12,247,933, respectively.  During 1992-94, Norwest’s retired                               
            employees made contributions to the postretirement medical trust of                         
            $473,832.62, $736,176.25, and $784,906.22, respectively.  In 1993,                          
            $175,216 was transferred from the master trust to the                                       
            postretirement medical trust.                                                               
            E.  Respondent’s Determinations                                                             
                  Respondent determined that Norwest’s method for computing the                         
            1991 contribution for postretirement benefits for retirees was                              
            improper and resulted in a contribution that exceeded the account                           
            limit for a reserve under section 419A(c)(2).  As a result of the                           
            1991 overfunding, respondent determined that the reserve was also                           
            overfunded in 1992-94.                                                                      
                                               OPINION                                                  
            A.    Statutory Framework:  Sections 419 and 419A                                           
                  Sections 419 and 419A limit deductions for contributions made                         
            by a taxpayer to an employee welfare benefit fund.14  In general,                           
            section 419(a)(1) denies a deduction for contributions paid or                              
            accrued by an employer to a welfare benefit fund.  However, if the                          
            contributions would otherwise be deductible, then section 419(a)(2)                         


                  14    For purposes of secs. 419 and 419A, a welfare benefit                           
            fund includes a VEBA that is exempt from taxation under sec.                                
            501(c)(9).                                                                                  




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