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In computing Norwest’s contribution for 1991, Mercer applied
a reasonable investment rate and used the appropriate individual
level premium cost method. We conclude, therefore, that Norwest’s
contribution to fund the reserve under section 419A(c)(2) for 1991
did not exceed the account limit.
Further, for years 1992-94, even using the higher after-tax
investment rates Mr. Daskais proposed of 6.0 percent for 1992, 5.7
percent for 1993, and 4.9 percent for 1994, it is clear that
Norwest’s contributions to fund the reserve do not exceed the
account limit when the reserve is computed by applying the
individual level premium cost method.
We conclude that Norwest’s contributions to the postretirement
benefit trust to fund a reserve for postretirement medical benefits
for 1991-94 did not exceed the account limit for a reserve under
section 419A(c)(2). We hold, therefore, that in computing
petitioners’ consolidated income tax for 1991-94, petitioners are
entitled to deductions for postretirement medical benefit
contributions of $30,689,717 in 1991, $2,170,000 in 1992,
$13,791,600 in 1993, and $12,247,933 in 1994.
To reflect the foregoing, and because other issues in these
cases remain for resolution,
An appropriate order will
be issued.
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