UNITED STATES TAX COURT



 LUCKY STORES, INC., AND SUBSIDIARIES, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No.   4446-93.                    Filed August 6, 1996.



     P made contractually required monthly
contributions to 29 collectively bargained defined
benefit pension plans. For its fiscal year ended
February 2, 1986, P obtained an extension of the time
within which to file its Federal income tax return to
October 15, 1986. On its return P deducted, in
addition to the 12 monthly contributions based on
employee hours worked during the fiscal year, monthly
contributions based on hours worked during months
intervening between the last day of the fiscal year and
the extended due date of the return. Held: the
contributions based on hours worked after the close of
the fiscal year and before October 15, 1986, were not
on account of P's February 2, 1986 fiscal year, as
required by sec. 404(a)(6), I.R.C., and are therefore
not deductible in that year.
     Barry W. Homer, Eric W. Jorgensen, and Grady M. Bolding, for
petitioner.

     Alan Summers, Kevin G. Croke, and Elizabeth L. Groenewegen,
for respondent.



     NIMS, Judge:   Respondent determined the following

deficiencies in petitioner's Federal income tax:



     Fiscal year ended (FYE)             Deficiency

        January 30, 1983                 $8,797,328
        February 3, 1985                  2,175,135
        February 2, 1986                 48,255,017


     Unless otherwise indicated, all section references are to

sections of the Internal Revenue Code in effect for the years at

issue, and all Rule references are to the Tax Court Rules of

Practice and Procedure.

     This case involves a number of issues.    The only issue to be

resolved in the present proceeding is petitioner's claim to a

deduction for union negotiated pension plan contributions for the

taxable year ended February 2, 1986.   The amount of the disputed

deduction is $36,661,529.

     Most of the facts have been stipulated and are so found.

     Petitioner is a Delaware corporation.    At the time the

petition was filed, petitioner's principal place of business was

located in Dublin, California.
                                 - 3 -


                         FINDINGS OF FACT

     At all relevant times, petitioner was subject to SEC public

financial reporting and other requirements and, along with its

subsidiaries, operated retail grocery stores located throughout

California and Nevada.   Petitioner requested and received from

the Internal Revenue Service an extension to October 15, 1986

within which to file its United States consolidated corporate

income tax return for the fiscal year ended February 2, 1986 (the

Current Taxable Year).   The return was timely filed.

     Under applicable Internal Revenue Code provisions, employers

are permitted to enter into "qualified" deferred compensation

arrangements to provide retirement and other benefits to

employees and their beneficiaries through single employer plans,

multiple employer plans, and multiemployer plans.   Plans that are

not established or maintained pursuant to collective bargaining

agreements are herein for convenience referred to as Multiple

Employer Plans.   Plans that are established and maintained

pursuant to collective bargaining agreements are herein for

convenience referred to as CBA Plans, or, on occasion, as

"multiemployer pension plans".    In both Multiple Employer Plans

and CBA Plans, the contributions of the participating employers

are pooled and used to provide the benefits of all the covered

employees, former employees, and their beneficiaries.   Section

413(b) contains certain rules exclusively applicable to CBA
                                - 4 -


Plans.   Section 413(c) contains certain rules applicable to

Multiple Employer Plans.    The plans involved in this case are CBA

Plans, subject to section 413(b).

     Under single employer plans, only the employees and former

employees of the single employer and their beneficiaries are

eligible to receive retirement or other benefits under the plan.

For this purpose, employers who are within a controlled group of

entities, or under common control (all within the meaning of

section 414(b) and (c)) are treated as a single employer for

purposes of section 401.

     At all relevant times, petitioner was required to and did

contribute money to 29 CBA Plans.   These plans were defined

benefit pension plans.   The following schedule sets forth the six

largest of the CBA Plans to which petitioner made contributions

(the Six Large CBA Plans) and their annual accounting periods

(Plan Years) for Federal tax purposes:

          CBA Plan                             Plan Year
Northern California Retail Clerks Union        January 1 -
  and Food Employers Joint Pension Plan        December 31

California Butchers Pension Trust Fund         July 1 -
                                               June 30

UFCW Midwest Pension Fund                      December 1 -
                                               November 30

Western Conference of Teamsters                January 1 -
                                               December 31

Central States SESW                            January 1 -
                                               December 31
                               - 5 -


Southern California UFCW                      April 1 -
                                              March 31


     Contributions to each CBA Plan that were attributable to

covered hours or weeks worked in a given month were due on the

20th of the month following the month in which the hours were

worked or compensated for.   (The parties stipulated that

contributions were due on the 30th of each month, but in her

testimony Sandra Turpen, the administrator of the Northern

California Retail Clerks' Employer Benefit Fund, gave the more

precise statement of the due date for contributions.)     An account

was considered delinquent if the payment was not received by the

last day of the month.

     During the calendar years 1985, 1986, and 1987, more than

one thousand employers made contributions to the CBA Plans on

behalf of thousands of unionized employees and their

beneficiaries.   At all times between January 1, 1985 and December

31, 1987 (the relevant period), each of the CBA Plans qualified

as a multiemployer pension plan within the meaning of the

Employee Retirement Income Security Act of 1974 (ERISA) and was a

plan to which section 413(b) and Subtitle E of Title IV of ERISA

applied.   At all times during the relevant period, each of the

CBA Plans was qualified under section 401(a) as a pension plan

and, accordingly, the trusts related to each CBA Plan were exempt

from taxation under section 501.
                              - 6 -


     As of the end of each month, petitioner calculated the

amount that it was required to contribute to each CBA Plan

attributable to covered hours or weeks worked during such month.

Petitioner multiplied the number of hours or weeks of work in

such month by covered employees times a monetary rate set by the

collective bargaining agreement.   Increases or decreases in the

number of covered employees along with increases or decreases in

the hours or weeks worked by covered employees required

petitioner (and each of the other contributing employers) to make

a separate calculation for its required contribution to each Plan

month by month.

     For all taxable years ending before the Current Taxable

Year, petitioner computed its deduction for contributions to the

CBA Plans in the following manner:    for each CBA Plan petitioner

added the 12 monthly contribution amounts attributable to covered

hours or weeks worked during a given taxable year and claimed

that total amount as a deduction for that year.   For every

taxable year ending before the Current Taxable Year, the total

amount claimed as a deduction for a taxable year did not include

any contributions attributable to hours or weeks worked after the

end of such year.

     For its Current Taxable Year, petitioner computed its

deduction for contributions to the CBA Plans claimed on its

return in the following manner:    petitioner added together the 12
                               - 7 -


monthly contribution amounts attributable to covered hours or

weeks worked between February 3, 1985 and February 2, 1986, and

also added the 8 monthly contributions attributable to covered

hours or weeks worked from February 3, 1986 through August 31,

1986 and made before October 15, 1986 (the date on which

petitioner filed its return for the Current Taxable Year).    In

addition, as to certain of the CBA Plans and bargaining units,

the dates were February 3, 1986 through September 30, 1986, in

which case there were nine monthly contributions instead of

eight.   Thus petitioner claimed a deduction for 19--in some cases

20--monthly contributions on the Current Taxable Year return.

     For fiscal years ending after February 2, 1986, petitioner

did not deduct any amounts which had been previously deducted on

its Federal income tax return for any prior year.   For fiscal

years ending after February 2, 1986, petitioner claimed a

deduction for no more than 12 monthly contributions in any such

fiscal year.   The record does not disclose the number of monthly

contributions claimed by petitioner for deduction purposes on its

Federal income tax return for the taxable year next succeeding

the Current Taxable Year.

     The $36,661,529 in dispute consists of $31,427,131 of

contributions to the Six Large CBA Plans, and $5,234,398 to the

19 smaller plans.   In the notice of deficiency, respondent did

not disallow the 12 monthly contributions totaling $57,139,406
                                - 8 -


that petitioner made to the CBA Plans for hours or weeks worked

by its covered employees in the Current Taxable Year and deducted

on petitioner's return for the Current Taxable Year.   The

$57,139,406 consists of $48,395,987 of contributions to the Six

Large CBA Plans and $8,743,419 to the 19 smaller plans.   In

addition, out of the total $96,890,058 deduction claimed by

petitioner in the Current Taxable Year, respondent did not

disallow $3,089,123 of contributions to certain profit-sharing

plans.

     Petitioner has never filed Form 3115 (Application for Change

in Accounting Method) concerning the method it used to arrive at

its deduction for contributions to the CBA Plans claimed on its

return for the Current Taxable Year.

     The administrator of each CBA Plan was a party independent

of petitioner.   The administrator of each CBA Plan was appointed

by the Board of Trustees of the Plan, one-half of whom are

selected by the employers and the other one-half of whom are

selected by the union locals.   Under the terms of the collective

bargaining agreements, the CBA Plans were entitled to collect

interest and/or late fees on delinquent contributions from

employers.   At all times during the relevant periods, each CBA

Plan administrator had in place procedures to monitor the actual

dates of receipt of each contributing employer's required

contribution.
                               - 9 -


     As required by ERISA sections 104 and 4065 and sections

6057(b) and 6058(a), after the close of each plan year the

administrator of each CBA Plan filed Annual Reports (Forms 5500)

and accompanying schedules with the IRS.   On Schedule B of Form

5500, each CBA Plan reported for each plan year only those

contributions paid under the applicable collective bargaining

agreement for hours or weeks worked during that particular plan

year.   Petitioner's monthly contributions to each CBA Plan were

reported by each CBA Plan on Schedule B of Form 5500 for that

plan year in which the related hours or weeks of the covered

employees had been worked.   Schedule B of Form 5500 is required

to be filed only with respect to a defined benefit plan that is

subject to the minimum funding standards of section 412 and ERISA

section 302, 88 Stat. 869, and one purpose of the completion of

the Schedule B is to demonstrate compliance or noncompliance with

such minimum funding standards.

     There was no provision in any of the collective bargaining

agreements prohibiting petitioner from contributing more than the

amount required under the agreements or contributing amounts in

advance of the date that such amounts became due.   There was no

provision in any of the collective bargaining agreements which

explained how the plan administrator was supposed to handle or

credit an amount received from an employer that was not earmarked

as a contribution then due under the collective bargaining
                              - 10 -


agreement.   However, no contributions were made by petitioner to

any of the CBA Plans during the relevant period that were not

required by any relevant collective bargaining agreement.

Petitioner, for public financial reporting purposes, accounted

for its monthly contributions to the CBA Plans attributable to

hours and weeks worked between February 3 and September 30, 1986

in its financial statements for its fiscal year immediately

succeeding its fiscal year ended February 2, 1986.

     The taxable year of a contributing employer need not be the

same as the plan year of a CBA defined benefit pension plan to

which such employer contributes.   Administrators of CBA Plans are

not required to know the taxable year adopted by contributing

employers.   Under the terms of the collective bargaining

agreements, petitioner was not required to report to the plan

administrators the deduction amounts it claimed for

contributions.

     At all times during the relevant periods, each of the CBA

Plans met the minimum funding requirement of section 412 and

ERISA section 302.   In preparing its funding standard account

under section 412 for each plan year, no CBA Plan actuary took

into account contributions made by the contributing employers for

hours worked by covered employees following such plan year.

Under each of the CBA Plans for all relevant periods, the

earning, crediting, and vesting of a participant's benefit by the
                               - 11 -


CBA Plan was independent of the making of any specific

contribution by an employer.

     The information recorded on Form 5500, Schedule B, for each

of the Six Large Plans shows that each of the Six Large Plans had

unfunded past service costs and that the actual contributions

during the plan year, together with the credit balance in the

funding standard account, exceeded the minimum funding

requirement for the plan year.    Therefore, section

404(a)(1)(A)(iii) was used to calculate the alternative limit for

purposes of determining petitioner's entitlement to deduct its

contributions to the CBA Plans.

     For purposes of section 413(b)(7), the applicable limitation

of section 404(a)(1)(A)(iii) with respect to contributions to

each of the Six Large CBA Plans for the plan year of such CBA

Plan that includes the date February 2, 1986, determined on a

plan year basis and as if all participants were employed by a

single employer, was as follows:

                   Plan Year Ended In Tax Year

                                 Deductible
                                    Limit              Contributions*

California Butchers              $34,200,292           $23,905,300
N. Cal. Retail Clerks             92,985,762            78,946,374
S. Cal. UFCW                     103,283,669            85,955,898
Central States SESW              957,945,930           664,202,000
UFCW M W Pension Plan             21,780,509            20,642,880
Western Conf./Teamsters          567,476,801           478,491,232
                              - 12 -


                    Plan Year Begun In Tax Year

                               Deductible
                                  Limit            Contributions*

California Butchers            $31,210,926         $23,026,000
N. Cal. Retail Clerks           85,567,809          84,810,863
S. Cal. UFCW                   103,071,886          92,593,714
Central States SESW            909,812,563         725,079,000
UFCW M W Pension Plan           22,500,268          21,053,791
Western Conf./Teamsters        647,156,505         500,960,586

     *Actual contributions during the plan year as recorded on
the Form 5500, Schedule B.


     The amount of total employer contributions actually paid to

each of the CBA Plans based on hours and weeks worked by eligible

employees during each relevant plan year, as reported on Schedule

B for such plan year, is an amount which, as of the beginning of

such plan year, the CBA Plan administrator of such CBA Plan could

have reasonably estimated or expected to be made by employers

with respect to hours and weeks worked by covered employees

during such plan year.

     Petitioner was never notified by any CBA Plan administrator

or other CBA Plan representative that the statutory deduction

limit was exceeded with respect to any CBA Plan for any relevant

period.   Petitioner did not notify any CBA Plan administrator or

other CBA Plan representative that the monthly contributions

attributable to hours and weeks worked after February 2, 1986
                               - 13 -


were to be applied to months ending on or before February 2,

1986.

     For purposes of paying benefits and plan expenses, all

contributions to each CBA Plan are pooled and no distinction is

made between contributions for any specific time period or

contributions made by any particular employer.

     Petitioner consulted with the firm of Price Waterhouse

regarding the acceleration of deductions for post-tax yearend

contributions to collectively bargained defined benefit pension

plans.   The parties stipulated that during the relevant period,

Price Waterhouse was engaged in marketing that type of

acceleration to certain clients and other employers that were

making required contributions to multiemployer defined benefit

pension plans.

     By section 601(a) and (b)(1) of the Tax Reform Act of 1986,

Pub. L. 99-514, 100 Stat. 2085, 2249, the top corporate tax rate

was reduced from 46 percent to 34 percent for tax years beginning

on or after July 1, 1987.   See S. Rept. 99-313, (1986) 1986-3

C.B. (Vol. 3), 219, 220-221; H. Conf. Rept. 99-841 (Vol. 2), at

II-59 (1986).    Income in taxable years that included July 1, 1987

(other than as the first day of such year) was subject to blended

rates.   

-


                               OPINION

     During the relevant period, petitioner made monthly

contributions to 29 CBA Plans on behalf of its unionized

employees.   For each CBA Plan, the amount of the monthly

contribution was the arithmetical result obtained by multiplying

the "covered hours worked" (the number of hours worked during the

month by employees covered under the respective collective

bargaining agreement (CBA)) by the "contribution rate", a dollar

amount set forth in the CBA.

     For any given taxable year prior to the Current Taxable

Year, petitioner deducted the 12 monthly contributions that were

calculated from covered hours worked during such year.   Then, as

to the Current Taxable Year, petitioner changed its method of

calculating its deduction.   For the Current Taxable Year,

petitioner obtained an extension to October 15, 1986, of the time

within which to file its return.   Between the date on which the

Current Taxable Year ended and the due date of the return, as

extended, petitioner made eight or in some cases nine monthly

contributions to the CBA Plans, and claimed these post-yearend

contributions (herein for convenience called "grace period

contributions") as a deduction for the Current Taxable Year, in

addition to the usual 12 monthly contributions.   As to the
                              - 15 -


Current Taxable Year, respondent denied the deduction for the

grace period contributions.

     Petitioner claims that it is entitled to deduct the grace

period contributions currently because they were "on account of"

its Current Taxable Year within the meaning of section 404(a)(6),

as explicated by Rev. Rul. 76-28, 1976-1 C.B. 106.    In an

unexpected burst of candor, petitioner admits that it is

attempting to deduct, for the Current Taxable Year,

"contributions made over a 20-month period".

     While section 404(a)(1)(A) states that pension plan

contributions are deductible "In the taxable year when paid",

section 404(a)(6) provides a grace period in that, in the words

of the section, "a taxpayer shall be deemed to have made a

payment on the last day of the preceding taxable year if the

payment is on account of such taxable year", subject to the

further condition that the payment be made "not later than the

time prescribed by law for filing the return for such taxable

year (including extensions thereof)."

     Petitioner also argues that under section 413(b)(7) its

contributions were within the deductible limits of section 404(a)

because the "anticipated contributions" for all the CBA Plans for

their respective plan years did not exceed any maximum deduction
                               - 16 -


limitation under section 404(a).   Moreover, petitioner argues

that the grace period contributions were "for the portion of" the

Current Taxable Year that ended within the various plan years of

the CBA Plans to which it made contributions, because under

section 404(a)(6) they were deemed to have been a payment made on

the last day of the Current Taxable Year.

     Respondent presents several alternative arguments.   First,

respondent contends that petitioner's longstanding practice of

deducting only contributions calculated from covered hours worked

during a given taxable year constituted an accounting method.    In

order to change to a different accounting method, petitioner was

required under section 446(e) to obtain the Commissioner's

consent, which was not done.   Second, respondent asserts that

petitioner's "new method", i.e., that of deducting grace period

contributions in the Current Taxable Year, fails to clearly

reflect income under section 446(b).    And, third, respondent

claims that the grace period contributions were not "on account

of" petitioner's current tax year within the meaning of section

404(a)(6).

     Section 404(a) specifies that employer contributions to

exempt trusts under various types of qualified employee benefit

plans are not deductible under any other Code provision, but if
                                - 17 -


they would otherwise be deductible, they are deductible under

section 404, subject to articulated limitations as to the amount

deductible in any taxable year.    The limitations on the amount

deductible are contained in section 404(a)(1)(A), which also

refers to the deduction of contributions "In the taxable year

when paid".   While section 404(a)(1)(A) provides the limits on

the amount that may be deducted, it does not specify the method

by which the actual amount of the deduction may be determined.

     The applicable limitations on contributions to the CBA Plans

in this case are contained in clauses (i) and (iii) of section

404(a)(1)(A), which, in combination, provide that the overall

limitation is the greater of the amount necessary to satisfy the

minimum funding standard of section 412(a) for plan years ending

within the employer's taxable year, and an amount equal to the

normal cost of the plan, augmented by any amount necessary to

amortize unfunded costs equally over 10 years.

     In addition, the flush language at the end of subparagraph

(A) of the foregoing section provides, among other things, that

the maximum amount deductible for the taxable year is to be an

amount equal to the full funding limitation for such year

determined under section 412.
                              - 18 -


     Section 404(a)(6) expands somewhat the time of payment

provision at the beginning of section 404(a)(1)(A) by providing:

          (6) Time when contributions deemed made.--For purposes
     of paragraphs (1), (2), and (3), a taxpayer shall be deemed
     to have made a payment on the last day of the preceding
     taxable year if the payment is on account of such taxable
     year and is made not later than the time prescribed by law
     for filing the return for such taxable year (including
     extensions thereof).


     As a further refinement of the section 404(a) limitations on

the deductibility of contributions, section 413 provides certain

rules that apply exclusively to "collectively bargained plans,

etc."   Section 413(a) provides that subsection (b) applies to any

plan (and any trust thereunder) maintained pursuant to a CBA;

i.e., a CBA Plan.   Various paragraphs of subsection (b) provide

rules that relate to CBA Plans, but the relevant paragraph for

our present purposes is paragraph (7), which furnishes a road map

for applying section 404(a) limitations insofar as they relate to

CBA Plans.   Section 413(b)(7) provides:

          (7) Deduction limitations.--Each applicable limitation
     provided by section 404(a) shall be determined as if all
     participants in the plan were employed by a single employer.
     The amounts contributed to or under the plan by each
     employer who is a party to the agreement, for the portion of
     his taxable year which is included within such a plan year,
     shall be considered not to exceed such a limitation if the
     anticipated employer contributions for such plan year
     (determined in a manner consistent with the manner in which
     actual employer contributions for such plan year are
     determined) do not exceed such limitation. If such
                                - 19 -


     anticipated contributions exceed such a limitation, the
     portion of each such employer's contributions which is not
     deductible under section 404 shall be determined in
     accordance with regulations prescribed by the Secretary.


     We think petitioner's attempt to use the expanded time of

payment provision of section 404(a)(6), as augmented by section

413(b)(7), to enlarge its current contribution deduction is

misguided.

     The legislative history explains that the purpose of

amending section 404(a)(6) was simply to place cash basis

taxpayers on the same footing as accrual basis taxpayers insofar

as contributions actually paid into the trust after the close of

the taxable year are concerned.    Before the amendment, only

contributions by accrual basis taxpayers made by the time for

filing tax returns could be treated as paid in the year for which

a return was due.   This allowed taxpayers sufficient time after

the close of the taxable year to determine the amount of their

contributions to be made to the plan.    Section 404(a)(6) extends

this flexibility to cash basis taxpayers.    H. Rept. 93-807 (1974)

1974-3 C.B. (Supp.) 236, 336.

     In addition, the conference report states that the intent of

permitting grace period contributions is so that they may relate

back to the plan year "for purposes of the minimum funding
                               - 20 -


standards".    H. Conf. Rept. 93-1280, at 290 (1974) 1974-3 C.B.

415, 451.    There is nothing in the legislative history to suggest

that Congress intended to expand the treatment of post-yearend

payments beyond extending parity to cash basis taxpayers and

making necessary calculations to determine the amount of the

contribution.

       Petitioner has the burden of proof in establishing that the

contributions it seeks to deduct are, in the words of section

404(a)(6), "on account of" the Current Taxable Year.    Rule

142(a).    In attempting to do this, petitioner places heavy

emphasis upon words contained in Rev. Rul. 76-28, 1976-1 C.B.

106.    Rev. Rul. 76-28, 1976-1 C.B. at 107, states that it

"provides rules with respect to the application of section

404(a)(6) * * * in those areas where the Service has determined

that guidelines are necessary pending the issuance of

regulations."    (We note that as of the date of this Opinion, some

20 years later, regulations have still not been forthcoming.)

Rev. Rul. 76-28 holds that

       a payment made after the close of an employer's taxable year
       to which amended section 404(a)(6) applies shall be
       considered to be on account of the preceding taxable year if
       (a) the payment is treated by the plan in the same manner
       that the plan would treat a payment actually received on the
       last day of such preceding taxable year of the employer, and
       (b) either of the following conditions is satisfied.
                              - 21 -


          (1) The employer designates the payment in writing to
     the plan administrator or trustee as a payment on account of
     the employer's preceding taxable year, or

           (2) The employer claims such payment as a deduction on
     his tax return for such preceding taxable year (or, in the
     case of a contribution by a partnership on behalf of a
     partner, the contribution is shown on schedule K of the
     partnership tax return for such year). [1976-1 C.B. at
     107.]

     Revenue rulings are not ordinarily precedential in this

Court.   Gordon v. Commissioner, 

, 635 (1987).    We need

not dwell on the question of the weight to be afforded Rev. Rul.

76-28 in this case, however (see Estate of Lang v. Commissioner,

, 407 (1975), affd. in part and revd. in part on an

unrelated issue 

(9th Cir. 1980)), because we believe

that in any case petitioner has failed to prove that the payments

in question were treated in the same manner that the CBA Plans

would treat a payment actually received on the last day of the

current taxable year.

     Section 413(b)(7) prescribes the method for determining the

parameters of the deduction limitations in the case of CBA Plans.

Section 413(b)(7) provides that each applicable section 404(a)

limitation is to be determined as if all participants in the plan

are employed by a single employer.     The amount contributed by

each employer under a CBA Plan will not exceed the maximum

deduction limitation if the anticipated employee contributions
                              - 22 -


for the plan year are no greater than the limitation.    H. Rept.

93-807, at 101, 1974-3 C.B. (Supp.) at 336.    Under section

413(b)(7), the anticipated employer contributions for a plan year

are to be determined in a manner consistent with the manner in

which actual employer contributions are determined.

     We would repeat at this juncture that although sections

404(a)(1)(A) and 413(b)(7) establish outside limits on the amount

that may be deducted in a given taxable year, these sections do

not determine the amount of the deduction.    Nevertheless, we

think sections 404(a)(1)(A) and 413(b)(7) establish the approach

to be taken to determine the amount of the actual deduction for

contributions to CBA Plans.

     In a case such as this, where a number of employers are

contributing to any given plan--and here 29 different CBA Plans

with differing plan years are involved--the computation of any

contributing employer's total contribution deduction for a

taxable year is obviously a very complex operation.    But it

stands to reason that the anticipated contributions from each

employer must be based upon a 12-month year, and the subsequent

contributions, and the consequent deductions, in order to be

consistent as required by section 413(b)(7) must likewise be

based upon a 12-month year.   A taxpayer-employer such as
                              - 23 -


petitioner may not unilaterally expand its deduction limitation,

and increase the amount of its deduction, simply by including

contributions in amounts that are inconsistent with anticipated

employer contributions.

     Furthermore, petitioner has not shown that its deduction as

enhanced by the post-yearend contribution falls within the plan

limits stipulated by the parties and reflected in our findings of

fact.   (The parties stipulated that actual contributions during

the plan year as recorded on Forms 5500, Schedule B, filed by the

Six Large Plan Administrators, fall within the deductible

limits.)   Petitioner merely argues that the plan's computation of

anticipated employer contributions is not concerned with the

amount of the employer's deduction.    But section 413(b)(7)

requires that the computation of anticipated employer

contributions must be consistent with actual employer

contributions, and we believe that if such consistency is

achieved, as in this case, then the actual contributions--those

based on hours worked in the taxable year--determine the amount

of the deduction.

     Sandra Turpen, the Plan Administrator for the Northern

California Retail Clerks' Employer Benefit Fund, testified that

the minimum funding standard for the fund is calculated on a
                              - 24 -


calendar year basis, by actuaries who base their calculations

upon data furnished by the Fund.   The Fund bills each employer on

the first of each month, indicating the contribution rate

applicable to that employer, and the employer in turn provides

the Fund with a list of employees and hours worked, calculates

the per hour rate times the hours worked, and makes its monthly

contribution accordingly.   As stated earlier, payments are due on

the 20th of the month, and are deemed delinquent if not received

by the end of the month.

     Petitioner's Current Taxable Year ended February 2, 1986.

It seems obvious that, except for delinquent payments on account

of a preceding month in the taxable year, the only grace period

contribution in this case that would be treated by the Northern

California Retail Clerks' Employer Benefit Fund in the same

manner that the Plan would treat a payment actually received on

February 2, 1986, would be the payment for hours worked in

January, 1986, and which was due February 20, 1986.   All monthly

payments thereafter would be treated by the Plan as being related

to hours worked in a tax year subsequent to the Current Taxable

Year.

     Petitioner complains that the administrative procedures of

the Northern California Retail Clerks' Employer Benefit Fund, as
                                - 25 -


described by Sandra Turpen, are not necessarily representative of

the procedures of any other plan, and may not therefore be relied

upon as the basis for finding facts except as to the Plan for

which Ms. Turpen was the administrator.    We find this argument

disingenuous.    Petitioner and respondent stipulated Ms. Turpen's

deposition as a joint exhibit in lieu of testimony by Ms. Turpen

at trial, without any reservation as to its use, or inferences to

be drawn from it, whatsoever.    Petitioner's purpose in

stipulating the deposition is not apparent, if the testimony is

not stipulated for the purpose of exemplifying the administrative

procedures of all of the CBA Plans involved in this case.    If

petitioner considers the administration of Ms. Turpen's plan to

be atypical, petitioner was free to introduce evidence as to how

the other plans were administered, which petitioner chose not to

do.   We therefore reject petitioner's complaint about scope of

the testimony.

      Petitioner argues that respondent's position is inconsistent

not only with Rev. Rul. 

, but also with the

administrative position taken in Technical Advice Memorandum

8210014 (TAM) and in a series of private letter rulings.

Respondent points out that section 6110(j)(3) prohibits using or

citing a written determination as a precedent, unless regulations
                              - 26 -


provide otherwise, which is not the case here.   See Estate of

Jalkut v. Commissioner, 

, 684 (1991).   Nevertheless,

since the TAM appears to be the wellspring of petitioner's

enhanced deduction claim, we deem it necessary to discuss it.

     The TAM purports to apply Rev. Rul. 76-28 as it relates to

section 404(a)(6) grace period contributions in defined

contributions plan cases.   As previously noted, Rev. Rul. 76-28

contains several tests (including one insignificant alternative)

for determining whether grace period contributions may be deemed

to have been made on the last day of the preceding taxable year.

One of the tests, easily met, is that the employer must claim the

contribution as a deduction on its tax return for the preceding

taxable year.

     The second test is that the plan must treat the

contributions in the same manner as payments actually received on

the last day of the preceding taxable year.   The TAM nullifies

this, the only really significant requirement of Rev. Rul. 76-28,

by holding that since there is no specific linkage between

contributions and benefits in a defined benefit plan, the

requirement that the plan treat the contributions in the same

manner as it would a contribution actually received on the last

day of the preceding taxable year, is "meaningless".
                              - 27 -


     Having thus seemingly emasculated Rev. Rul. 76-28 as it

might otherwise apply to a vast number of employee benefit plans

if the TAM were applied across the board, the TAM concludes,

however, by saying that "This ruling does not consider the actual

amounts deductible for the * * * [relevant] taxable year."

Petitioner does not mention this pronouncement.

     Rev. Rul. 76-28 provides that a grace period contribution is

to be considered "on account of" (the words of section 404(a)(6))

the preceding taxable year if the contribution is treated by the

plan in the same manner that the plan would treat a payment

actually received on the last day of such preceding taxable year.

The TAM states that "A contribution generally does not have any

effect on the actual benefits payable to an employee."

Petitioner argues that all contributions to each CBA Plan in this

case were commingled with all other employers' contributions in a

single undifferentiated pool and used to pay plan benefits and

expenses without distinction as to when or by whom any

contribution was made.   Thus, reasons petitioner, it follows that

any grace period contribution is treated by the plan in the same

manner as the plan would treat a "last day" contribution.

     We are not convinced that the absence of a contribution-

benefit linkage establishes "same treatment", nor that the same
                              - 28 -


treatment standard created by Rev. Rul. 76-28 is the only

standard by which to measure the requirement of section 404(a)(6)

that grace period contributions be "on account of" the relevant

taxable year.   We are, convinced, however, that petitioner may

not arbitrarily expand the deductible limit for any taxable year

by the simple expedient of including, in the taxable year's

deduction, contributions based entirely upon hours worked by the

plans's participants in a subsequent year.

     Petitioner argues that respondent cannot change her

longstanding administrative practice and apply the change on a

retroactive basis.   Respondent replies that the five private

letter rulings, and possibly the TAM, relied on by petitioner

relate to single employer, not multiemployer pension plans.     In

the former case, the single employer has flexibility in deciding

how much and when to contribute, since there are no contractual

provisions requiring the single employer to contribute pursuant

to a formula at regular intervals.     Petitioner's contributions,

on the other hand, are, by contract, mechanical and predictable.

Whether the private letter rulings, plus the TAM and Rev. Rul.

76-28, rise to the level of "longstanding administrative

practice" is, to say the least, problematical, but in any event,

as the Supreme Court has stated in Dixon v. United States, 381
                             - 29 -


U.S. 68, 73 (1965), Congress, and not the Commissioner,

prescribes the tax laws, so that if indeed Rev. Rul. 76-28 and

its ruling letter progeny are inconsistent with the thrust of

section 404(a)(6), they must give way to the statute.   See also

Chevron, U.S.A. v. Natural Res. Def. Council, 

, 842-

843 (1984).

     We have considered petitioner's remaining arguments, which

are basically variations on a theme, and find them equally

unpersuasive.

     We hold that petitioner's grace period contributions, except

those that relate to hours worked in January, 1986, are not on

account of petitioner's taxable year ended February 2, 1986, as

required by section 404(a)(6), and are therefore not deductible

in that year.

     To reflect the foregoing and issues previously resolved,

                                   Decision will be entered

                              under Rule 155.