Masonry Magazine August 1972 Page. 15
the tax case arose-making it impossible to establish the fate of the letter.
It was the court's ruling that since the taxpayers could not prove for a fact that they had complied strictly with the election requirements they could not be the recipients of its benefits. The court refused to allow them any consideration for their good-faith efforts to comply. Mora v. Commissioner, T.C. Memo, 1972-123.
EMPLOYEE PENSION PLANS
In many areas the tax laws must certainly seem to be frustratingly difficult for employers. But if some areas are more perplexing than others, the matter of qualifying a pension plan must be in this group.
Recently a small employer established a plan that was found to be solid in form but failed to qualify because when put into operation the IRS found that it discriminated. Under the terms of the plan in question, the employer was scheduled to contribute a basic percentage of each employee's annual compensation plus one percent more for each year of participation. When the employer's contribution reached 15% of the employee's annual compensation, then the employer's contribution became fixed.
Due to a rapid turnover in employees only three employees were in the plan. One was an officer-employee and the others rank-and-file employees. The officer had 11 years of participation in the plan and each of the rank-and-file employees had three years of participation.
The IRS ruled that even though the plan provides for a fixed contribution by the employer that would be the same for all, it nevertheless in fact discriminated in its operation in favor of the officer-employee. Therefore, under these circumstances the IRS held that the plan could not qualify. Rev. Rul. 72-303.
Another employee plan that found its way to the IRS for a ruling on its qualification had just one questionable provision. Under terms of the plan, annuity payments would begin to be paid upon the retirement of an employee for life, and thereafter to his designated beneficiary (not necessarily his spouse) for as long as his named spouse should live. For example, an employee could elect to have his pension benefits paid (after his death) to his child for the duration of his wife's life-rather than paid to the wife for the duration of her life.
The IRS ruled that neither the Internal Revenue Code nor the Regulations require that the spouse actually be the participant's beneficiary. Therefore, it was held that the provision in this plan that permitted distribution of a participant's interest over the lives of the employee and his spouse will not prevent the plan from qualifying even though the employee's beneficiary is someone other than his spouse. Rev. Rul. 72-240.
Once upon a time long ago, there lived a dinosaur and an ant. The dinosaur could smash a million ants in only an instant. In fact, he could lick just about any creature on earth. But he didn't believe in teamwork. The ant did. Look who survived.
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masonry August, 1972
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