Court Rulings

As of June 13, 1983, P had been employed for over 30 years by BBSC, and been a partner in BBMP, an Ohio general partnership composed of management personnel from BBSC since August 30, 1976. On June 13, 1983, P's employment with BBSC was terminated. P believed that his termination was in contravention of BBMP's partnership agreement, and BBSC and BBMP disagreed. In order to resolve this dispute, on August 12, 1983, P, BBSC, and BBMP entered into a settlement agreement. Pursuant to the settlement agreement, P agreed among other things not to compete with BBSC for a period of two years, and in return BBSC agreed to make severance payments to P for two years. Additionally, the agreement provided that P's interest in BBMP would be liquidated through a series of three annual payments in the amount of $ 125,000 each. P attempted to establish a self-employed qualified retirement plan under sec. 401(a), I.R.C., and contributed to this plan the third installment payment in the amount of $ 125,000 that he had received from BBMP in 1986 in liquidation of his interest in the partnership. R determined that P did not meet the requirement of being an employer within the meaning of sec. 401(c)(4), I.R.C., and that P's retirement plan was not a qualified retirement plan under sec. 401(a), I.R.C. P alleges that subsequent to his termination from BBSC and BBMP, he engaged in a noncompeting beverage distributorship. The record reflects no contributions to the Plan with respect to earned income from any beverage distributorship operated by P. Held: It is appropriate to look to secs. 708, and 736, I.R.C., to determine when a partnership interest terminates for purposes of sec. 401, I.R.C. Consequently, pursuant to sec. 1.736-1(a)(6), Income Tax Regs., P was considered a partner in BBMP until he received the final payment in liquidation of his interest in the partnership. Therefore, BBMP, and not P, was P's employer within the meaning of sec. 401(c), I.R.C., and the plan was accordi

Appeal from the Workers' Compensation Court En Banc. Petitioner sought review of order of the Workers' Compensation Court en banc affirming trial authority's order finding that petitioner was an independent contractor and denying workers' compensation coverage. Petitioner alleged that Ellsworth Motor Freightlines, Inc., was acting as his workers' compensation insurance carrier and that he was an employee of Shamrock Coal Company at the time of his injury. ORDER OF THE WORKERS' COMPENSATION COURT EN BANC SUSTAINED.

Petitioner had both a qualified profit-sharing plan and a qualified money purchase pension plan. In a pre-ERISA taxable year, petitioner attempted to deduct as a sec. 404(a)(7), I.R.C. 1954, carryover deduction amounts in excess of any amount allowable as a deduction under sec. 404(a)(1)(C) and (a)(1)(D). Held: No sec. 404(a)(7) carryover deduction was created by petitioner's contributions to its pension plan in excess of the limits set in sec. 404(a)(1). During the years in issue the second sentence of sec. 404(a)(7) provided a carryover deduction only for amounts otherwise allowable as deductions which had been disallowed in a previous year under the first sentence of that paragraph.