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Petersen v. Comm’r of Internal Revenue, 924 F.3d 1111 (10th Cir. May 15, 2019)

May 15, 2019

Majority shareholders of a closely-held S corporation appealed an adverse tax decision.  The Internal Revenue Service disallowed deductions based on contributions to an employee stock ownership plan (ESOP).  Discussing general principles applicable to trusts and ERISA, the Tenth Circuit affirmed and held an ESOP constitutes a trust within the meaning of I.R.C. § 267, which meant that the corporation could not claim a deduction for contributions to its ESOP in 2009, even though expenses were incurred that year, if the corporation did not actually pay the amounts until 2010.