Wells Fargo & Company (f.k.a. Norwest Corporation) and Subsidiaries - Page 33




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            10    Smaller of (K - P) and (O + Q)                                                        
            11    O + Q - R                                                                             
                  3.    Positions of the Parties                                                        
                  Petitioners assert that the reserve under section 419A(c)(2)                          
            refers to the employer’s accrued liability to provide the                                   
            postretirement benefits.  Petitioners maintain that, since the                              
            entry age normal cost method is the only method that directly                               
            computes an accrued liability and allocates the present value of an                         
            employee’s future benefit over the employee’s entire working life,                          
            the account limit for the reserve is equal to the accrued liability                         
            computed under the entry age normal cost method.  Petitioners                               
            further maintain that (1) for a retiree the accrued liability is                            
            the present value of the employee’s future benefits, and (2) for an                         
            active employee the accrued liability is the present value of the                           
            employee’s future benefits minus the present value of future normal                         
            costs determined under the entry age normal cost method.                                    
            Petitioners contend that their contribution to the reserve for each                         
            year at issue did not cause the reserve to exceed the account limit                         
            and, therefore, the contributions were deductible under section                             
            419.                                                                                        
                  Respondent argues that petitioners’ position is inconsistent                          
            with (1) the language of section 419A(c)(2), (2) the established                            
            judicial precedent interpreting that section, (3) Congress’s                                
            purpose in enacting that section, (4) the accepted interpretation                           
            given “nearly identical language” in the provisions governing                               





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