- 52 -
299 F.3d 221 (3d Cir. 2002). Respondent determined that neither
the PCs’ payments to VRD/RTD related to the STEP plan nor
VRD/RTD’s ensuing contributions to the STEP plan were deductible
under section 162(a) as ordinary and necessary business expenses
and that the amounts of the payments were includable in the
doctors’ gross income under section 61(a). Respondent argues
that the payments were made for the doctors’ personal benefit.
Petitioners argue that the payments and contributions are
deductible under section 1.162-10(a), Income Tax Regs., as
“Amounts paid or accrued within the taxable year for dismissal
wages” and, thus, that the payments are not includable in the
doctors’ gross income. We agree with respondent’s determination
on the disallowed deductions but disagree with respondent’s
determination on the inclusion in income. We set forth our
analysis below primarily in two sections. The first section sets
forth our opinion of the credibility of the witnesses. The
second section sets forth our opinion on the substantive issues
at hand.
II. Credibility of the Witnesses
A. Expert Witnesses
At trial, each party called an expert witness in support of
their and his respective positions. Petitioners called
Michael L. Frank (Mr. Frank), and the Court recognized him as an
expert on experience rating and risk sharing. Mr. Frank is an
Page: Previous 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 Next
Last modified: March 27, 2008