under the plan to persons who qualify as participants in those succeeding taxable years to form the basis for applying the excess within the limitations provided under the Internal Revenue Code to justify a carry-over in the years which followed the termination of the trust. This conclusion is required since the clear and unambiguous provision of the statute and the regulations prevent the carry-over of excess contributions into the taxable year 1950, and the taxpayer's claim cannot be sustained for the refund alleged to have been erroneously assessed and collected for the fiscal year which ended January 31, 1950.
The alternative claim of the taxpayer of applying the unused contributions in excess of the amount permitted under the Internal Revenue Code to the profit sharing trust as a loss in the fiscal year ending January 31, 1949, on the theory that a loss resulted from the worthlessness of an asset is also without legal basis.
Deductions of this nature can be allowed only as provided under Section 23(p) of the Internal Revenue Code, which is the exclusive section under which payments in the nature of those with which we are concerned may be allowed as a deduction.
Since the taxpayer's contributions do not fall within section 23(p) for the reason that the trust had been terminated in the year 1948, as a matter of law, no deduction can be legally sustained for the taxable year ending January 31, 1950. South Chester Tube Co. v. Commissioner, 14 T.C. 1229.
The facts upon which the conclusions herein made are premised have been stipulated and agreed to by the parties and are approved, as follows:
1. Plaintiff at all of the times hereinafter mentioned was, and now is, a corporation duly organized and existing under the laws of the Commonwealth of Pennsylvania, with registered office at 112-114 South Main Street, Greensburg, Westmoreland County, in this District.
2. The plaintiff brings this action against the United States of America to recover income taxes and interest thereon assessed and collected by the defendant from the plaintiff. Plaintiff is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, and jurisdiction is conferred upon this court by 28 U.S.C.A. § 1346(a)(1).
3. In keeping its books, plaintiff regularly used the accrual method of accounting and regularly computed its taxable income for Federal Income Tax purposes on the basis of a fiscal year ending on the last day of January.
4. Plaintiff's claim is for the recovery of income taxes in the principal amount of $ 12,558.71 for the fiscal year ended January 31, 1950; or, in the alternative, in the principal amount of $ 9,513.08 for the fiscal year ended January 31, 1949; together with interest thereon.
5. Plaintiff, during its fiscal year ended January 31, 1946, established the 'Royer's, Inc. Profit Sharing Plan' which together with the Trust forming a part thereof, was embodied in an Agreement executed by Royer's, Inc., and the Union Trust Company of Pittsburgh, as Trustee, on December 27, 1945, but effective as of January 31, 1946. Under the terms of the said plan, plaintiff was required to make annual irrevocable contributions, to be used for the exclusive benefit of the employee beneficiaries, equal to 50% of plaintiff's annual net income after the deduction therefrom of all taxes, including Federal Income and Profits Taxes, and 5% of its net worth at the close of plaintiff's preceding taxable year.
6. By letter dated April 10, 1946, the Commissioner of Internal Revenue, hereinafter referred to as the 'Commissioner', advised the plaintiff that in his opinion the Royer's, Inc., Profit Sharing Plan, and the Trust forming a part thereof, meet the requirements of Section 165(a) of the Internal Revenue Code of 1939 (26 U.S.C.A. § 165(a)), as amended.
7. With respect to its fiscal years ended January 31, 1946, January 31, 1947 and January 31, 1948, plaintiff, pursuant to the terms of said Plan, paid the following sums to The Union Trust Company of Pittsburgh, as Trustee, as its contributions to the aforesaid Plan for the fiscal years shown:
Year Contribution Date Paid to Trustee
Jan. 31, 1946 $ 33,359.81 Jan. 21, 1946 $10,000.00
Mar. 26, 1946 17,201.06
Mar. 28, 1946 6,155.43
Apr. 15, 1946 3.32
Jan. 31, 1947 72,697.85 Mar. 29, 1947
Jan. 31, 1948 50,204.55 Mar. 23, 1948
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