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requirements is a question of fact. See Commissioner v.
Heininger, 320 U.S. 467, 475 (1943).
Petitioners argue that section 162(a) allowed VRD/RTD and
the PCs to deduct the amounts related to the STEP plan because
those amounts represented “dismissal wages” paid to a “welfare or
similar benefit plan” within the scope of section 1.162-10(a),
Income Tax Regs. We disagree. While the STEP plan may have been
cleverly designed to appear to be a welfare benefits fund and
marketed as such, the facts of these cases establish that the
plan was nothing more than a subterfuge through which the
participating doctors, through VRD/RTD, used surplus cash of the
PCs to purchase cash-laden whole life insurance policies
primarily for the benefit of the participating doctors
personally. While employers are not generally prohibited from
funding term life insurance for their employees and deducting the
premiums on that insurance as a business expense under section
162(a), employees are not allowed to disguise their investments
in life insurance as deductible benefit-plan expenses when those
investments accumulate cash value for the employees personally.
See Neonatology Associates, P.A. v. Commissioner, supra at 88-89.
The insurance premiums at hand pertained to the
participating doctors’ personal investments in whole life
insurance policies that primarily accumulated cash value for
those doctors personally. VRD/RTD’s contributions to the STEP
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