Commissioner of Internal Revenue v. Keystone Consolidated Industries, Inc. (508 U.S. 152)
U.S. Supreme Court · decided May 24, 1993 · Supreme Court Database (Spaeth)
- Citation
- 508 U.S. 152 · 113 S. Ct. 2006
- Decided
- May 24, 1993
- Term
- October Term 1992
- Vote
- 8–1
- Majority author
- Justice Blackmun
- Issue area
- Federal Taxation
- Disposition
- Reversed
- Outcome
- Petitioning party won
- Ideological direction
- Liberal
Opinion excerpt
Justice Blackmun delivered the opinion of the Court. In this case, we are concerned with the legality of an employer’s contributions of unencumbered property to a defined benefit pension plan. Specifically, we must address the question whether such a contribution, when applied to the employer’s funding obligation, is a prohibited “sale or exchange” under 26 U. S. C. §4975 so that the employer thereby incurs the substantial excise taxes imposed by the statute. I A “defined benefit pension plan,” as its name implies, is one where the employee, upon retirement, is entitled to a fixed periodic payment. The size of that payment usually depends upon prior salary and years of service. The more common “defined contribution pension plan,” in contrast, is typically one where the employer contributes a percentage of payroll or profits to individual employee accounts. Upon retirement, the employee is entitled to the funds in his account. See 29 U. S. C. §§ 1002(34) and (35). If either type of plan qualifies for favorable tax treatment, the employer, for income tax purposes, may deduct its current contributions to the plan; the retiree, however, is not taxed until he receives payment from the plan. See 26 U. S. C. §§ 402(a)(1) and 404(a)(1). II The facts that are pertinent for resolving the present litigation are not in dispute. During its taxable years ended June 30, 1983, through June…
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