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USC Title 26 enacted through 2008

§ 419. Treatment of funded welfare benefit plans

General rule
Contributions paid or accrued by an employer to a welfare benefit fund -
shall not be deductible under this chapter, but
if they would otherwise be deductible, shall (subject to the limitation of subsection (b)) be deductible under this section for the taxable year in which paid.
The amount of the deduction allowable under subsection (a)(2) for any taxable year shall not exceed the welfare benefit fund's qualified cost for the taxable year.
Qualified cost
For purposes of this section -
In general
Except as otherwise provided in this subsection, the term "qualified cost" means, with respect to any taxable year, the sum of -
the qualified direct cost for such taxable year, and
subject to the limitation of section 419A(b), any addition to a qualified asset account for the taxable year.
Reduction for funds after-tax income
In the case of any welfare benefit fund, the qualified cost for any taxable year shall be reduced by such fund's after-tax income for such taxable year.
Qualified direct cost
In general
The term "qualified direct cost" means, with respect to any taxable year, the aggregate amount (including administrative expenses) which would have been allowable as a deduction to the employer with respect to the benefits provided during the taxable year, if -
such benefits were provided directly by the employer, and
the employer used the cash receipts and disbursements method of accounting.
Time when benefits provided
For purposes of subparagraph (A), a benefit shall be treated as provided when such benefit would be includible in the gross income of the employee if provided directly by the employer (or would be so includible but for any provision of this chapter excluding such benefit from gross income).
60-month amortization of child care facilities
In general
In determining qualified direct costs with respect to any child care facility for purposes of subparagraph (A), in lieu of depreciation the adjusted basis of such facility shall be allowable as a deduction ratably over a period of 60 months beginning with the month in which the facility is placed in service.
Child care facility
The term "child care facility" means any tangible property which qualifies under regulations prescribed by the Secretary as a child care center primarily for children of employees of the employer; except that such term shall not include any property -
not of a character subject to depreciation; or
located outside the United States.
After-tax income
In general
The term "after-tax income" means, with respect to any taxable year, the gross income of the welfare benefit fund reduced by the sum of -
the deductions allowed by this chapter which are directly connected with the production of such gross income, and
the tax imposed by this chapter on the fund for the taxable year.
Treatment of certain amounts
In determining the gross income of any welfare benefit fund -
contributions and other amounts received from employees shall be taken into account, but
contributions from the employer shall not be taken into account.
Item only taken into account once
No item may be taken into account more than once in determining the qualified cost of any welfare benefit fund.
Carryover of excess contributions
If -
the amount of the contributions paid (or deemed paid under this subsection) by the employer during any taxable year to a welfare benefit fund, exceeds
the limitation of subsection (b),
such excess shall be treated as an amount paid by the employer to such fund during the succeeding taxable year.
Welfare benefit fund
For purposes of this section -
In general
The term "welfare benefit fund" means any fund -
which is part of a plan of an employer, and
through which the employer provides welfare benefits to employees or their beneficiaries.
Welfare benefit
The term "welfare benefit" means any benefit other than a benefit with respect to which -
section 83(h) applies,
section 404 applies (determined without regard to section 404(b)(2)), or
section 404A applies.
The term "fund" means -
any organization described in paragraph (7), (9), (17), or (20) of section 501(c),
any trust, corporation, or other organization not exempt from the tax imposed by this chapter, and
to the extent provided in regulations, any account held for an employer by any person.
Treatment of amounts held pursuant to certain insurance contracts
In general
Notwithstanding paragraph (3)(C), the term "fund" shall not include amounts held by an insurance company pursuant to an insurance contract if -
such contract is a life insurance contract described in section 264(a)(1), or
such contract is a qualified nonguaranteed contract.
Qualified nonguaranteed contract
In general
For purposes of this paragraph, the term "qualified nonguaranteed contract" means any insurance contract (including a reasonable premium stabilization reserve held thereunder) if -
there is no guarantee of a renewal of such contract, and
other than insurance protection, the only payments to which the employer or employees are entitled are experience rated refunds or policy dividends which are not guaranteed and which are determined by factors other than the amount of welfare benefits paid to (or on behalf of) the employees of the employer or their beneficiaries.
In the case of any qualified nonguaranteed contract, subparagraph (A) shall not apply unless the amount of any experience rated refund or policy dividend payable to an employer with respect to a policy year is treated by the employer as received or accrued in the taxable year in which the policy year ends.
Method of contributions, etc., having the effect of a plan
If -
there is no plan, but
there is a method or arrangement of employer contributions or benefits which has the effect of a plan,
this section shall apply as if there were a plan.
Extension to plans for independent contractors
If any fund would be a welfare benefit fund (as modified by subsection (f)) but for the fact that there is no employee-employer relationship -
this section shall apply as if there were such a relationship, and
any reference in this section to the employer shall be treated as a reference to the person for whom services are provided, and any reference in this section to an employee shall be treated as a reference to the person providing the services.

Tax Code (Internal Revenue Code) Section Index

U.S. GAAP by Codification Topic
105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold

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Tax Code (Internal Revenue Code) Section Index

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