V.R. DeAngelis M.D.P.C. & R.T. Domingo M.D.P.C., V. R. DeAngelis M.D.P.C., Tax Matters Partner, et al. - Page 2

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               John T. Morin and Ira B. Stechel, for petitioners.                     
               Peter James Gavagan, Peggy J. Gartenbaum, and Thomas A.                
          Dombrowski, for respondent.                                                 

                       MEMORANDUM FINDINGS OF FACT AND OPINION                        

               LARO, Judge:  These cases are consolidated for purposes of             
          trial, briefing, and opinion.  Each couple consists of a medical            
          doctor and his wife, and each doctor is the sole owner of an S              
          corporation that was a partner in the partnership V.R. DeAngelis            
          M.D.P.C. & R.T. Domingo M.D.P.C. (VRD/RTD).  These cases concern            
          amounts paid in 1993 and 1994 by the S corporations to VRD/RTD              
          and its ensuing contributions of those amounts to the Severance             
          Trust Executive Program Multiple Employer Supplemental Benefit              
          Plan and Trust (STEP), a plan that was promoted to wealthy                  
          professionals as a welfare benefits fund that was part of a 10-             
          or-more-employer plan described in section 419A(f)(6).2  STEP               
          used the contributions to purchase and pay the premiums on six              
          whole life insurance policies, five of which were each written              
          with respect to one or both spouses of each couple (with the                

               2 Unless otherwise indicated, section references are to the            
          applicable versions of the Internal Revenue Code, Rule references           
          are to the Tax Court Rules of Practice and Procedure, and dollar            
          amounts are rounded to the dollar.  We use the term “plan” for              
          convenience and do not suggest that any part of the STEP plan is            
          a bona fide plan for Federal income tax purposes.                           

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