Edward L. Burnetta, P.A. v. Commissioner

U.S. Tax Court

Edward L. Burnetta, P.A. v. Commissioner

68 T.C. No. 13, 1977 U.S. Tax Ct. LEXIS 115

CourtUnited States Tax Court

DecidedApril 28, 1977

DocketDocket Nos. 6293-75, 6294-75, 6335-75, 6339-75, 6340-75.

StatusPublished

This text of 68 T.C. No. 13 (Edward L. Burnetta, P.A. v. Commissioner) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Edward L. Burnetta, P.A. v. Commissioner, 68 T.C. No. 13, 1977 U.S. Tax Ct. LEXIS 115 (tax 1977).

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Opinion

EDWARD L. BURNETTA, O.D., P.A., ET AL., ¹ Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Edward L. Burnetta, P.A. v. Commissioner

Docket Nos. 6293-75, 6294-75, 6335-75, 6339-75, 6340-75.

United States Tax Court

1977 U.S. Tax Ct. LEXIS 115; 68 T.C. No. 13;

April 28, 1977, Filed; WITHDRAWN May 16, 1977

*115 Certain individuals worked daily in the offices of the two petitioner professional corporations, but the workers' records were maintained and their paychecks were issued by a separate payroll service corporation. These individuals were not covered by the professional corporations' respective pension and profit-sharing plans. The professional corporations hired these workers, determined their initial rates of pay as well as any subsequent increases, and retained the right to control them in the performance of their office duties.

The pension and profit-sharing plans established by each professional corporation provided that a participant's proportionate interest therein would be forfeited if he should be discharged and convicted for embezzlement or theft of company property.

Held, the office personnel are employees of the professional corporations and such corporations' respective pension and profit-sharing plans fail to qualify under sec. 401, I.R.C. 1954, because such plans fail to satisfy the coverage requirements of sec. 401(a)(3)(A), I.R.C. 1954.

Held, further, the possibility that the participants in the respective plans could forfeit their interests therein if discharged*116 and convicted for theft or embezzlement does not present a "substantial risk of forfeiture" and, therefore, plan contributions made on their behalf are includable in their gross income under sec. 83, I.R.C. 1954, and deductible by the corporations under sec. 404(a)(5), I.R.C. 1954, once their rights have become otherwise vested.

Clifford N. Jarrett, for the petitioners.

John Wendell Paul, for the respondent.

FORRESTER

FORRESTER, Judge

Footnotes

1. Cases of the following petitioners are consolidated herewith: Edward L. Burnetta, docket No. 6294-75; Charles A. Crockett and Marie Crockett, docket No. 6335-75; Charles A. Crockett, M.D., P.A., docket No. 6339-75; and Edward L. Burnetta, O.D., P.A., Employees Profit Sharing Trust, Traders National Bank, Trustee, docket No. 6340-75.↩

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EDWARD L. BURNETTA, O.D., P.A., ET AL., ¹ Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Edward L. Burnetta, P.A. v. Commissioner

Docket Nos. 6293-75, 6294-75, 6335-75, 6339-75, 6340-75.

United States Tax Court

1977 U.S. Tax Ct. LEXIS 115; 68 T.C. No. 13;

April 28, 1977, Filed; WITHDRAWN May 16, 1977

*115 Certain individuals worked daily in the offices of the two petitioner professional corporations, but the workers' records were maintained and their paychecks were issued by a separate payroll service corporation. These individuals were not covered by the professional corporations' respective pension and profit-sharing plans. The professional corporations hired these workers, determined their initial rates of pay as well as any subsequent increases, and retained the right to control them in the performance of their office duties.

The pension and profit-sharing plans established by each professional corporation provided that a participant's proportionate interest therein would be forfeited if he should be discharged and convicted for embezzlement or theft of company property.

Held, the office personnel are employees of the professional corporations and such corporations' respective pension and profit-sharing plans fail to qualify under sec. 401, I.R.C. 1954, because such plans fail to satisfy the coverage requirements of sec. 401(a)(3)(A), I.R.C. 1954.

Held, further, the possibility that the participants in the respective plans could forfeit their interests therein if discharged*116 and convicted for theft or embezzlement does not present a "substantial risk of forfeiture" and, therefore, plan contributions made on their behalf are includable in their gross income under sec. 83, I.R.C. 1954, and deductible by the corporations under sec. 404(a)(5), I.R.C. 1954, once their rights have become otherwise vested.

Clifford N. Jarrett, for the petitioners.

John Wendell Paul, for the respondent.

FORRESTER

FORRESTER, Judge

Footnotes

1. Cases of the following petitioners are consolidated herewith: Edward L. Burnetta, docket No. 6294-75; Charles A. Crockett and Marie Crockett, docket No. 6335-75; Charles A. Crockett, M.D., P.A., docket No. 6339-75; and Edward L. Burnetta, O.D., P.A., Employees Profit Sharing Trust, Traders National Bank, Trustee, docket No. 6340-75.↩

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68 T.C. No. 13, 1977 U.S. Tax Ct. LEXIS 115, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edward-l-burnetta-pa-v-commissioner-tax-1977.