Wells Fargo & Company (f.k.a. Norwest Corporation) and Subsidiaries - Page 16




                                                - 16 -                                                  
            permits a deduction for the taxable year in which the contribution                          
            is paid, subject to the limitation contained in section 419(b).                             
                  Section 419(b) limits the deduction for any taxable year to                           
            the welfare benefit fund’s “qualified cost”.15  The fund’s qualified                        
            cost is equal to the sum of the fund’s “qualified direct cost” for                          
            the year, and, subject to the limitation of section 419A(b), any                            
            addition to a “qualified asset account” for the year.16  Sec.                               
            419(c)(1).                                                                                  
                  Section 419A(a) defines a qualified asset account as any                              
            account consisting of assets set aside to provide for the payment                           
            of (1) disability benefits, (2) medical benefits, (3) SUB                                   
            (supplemental compensation benefit) or severance pay benefits, or                           
            (4) life insurance benefits.  Additions to a qualified asset                                
            account are included in the fund’s qualified cost only to the                               
            extent they do not exceed the fund’s “account limit” for the                                
            taxable year.  Sec. 419A(b).                                                                
                  For purposes of the present case, the account limit includes:                         
            (1) The amount reasonably and actuarially necessary to fund claims                          
            that are incurred but unpaid as of the close of the taxable year                            
            and related administrative costs and (2) the amount of an                                   



                  15    A contribution to a welfare benefit fund in excess of                           
            that year’s qualified cost is treated as a contribution by the                              
            employer to the fund during the succeeding taxable year.  Sec.                              
            419(d).                                                                                     
                  16    The fund’s qualified cost for the taxable year is reduced                       
            by the fund’s after-tax income for that year.  Sec. 419(c)(2).                              




Page:  Previous  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  Next

Last modified: May 25, 2011