¹The Sherwin-Williams Co. Employee Health Plan Trust, ND OH, 10/2/02.

²IRS Letter Ruling (TAM) 200317036 (4/25/03).

³In determining deemed unrelated income, at the election of the employer, two or more nonexempt welfare benefit funds of the employer may be treated as a single fund. H.R. Conf. Rep. No. 98-861, at 1163 (1984). Since deemed unrelated income of a welfare benefit trust is defined in section 419A(g)(2) as the amount that would have been in the funds UBTI under section 512(a)(3) if the fund were a VEBA, and there is no indication that a different aggregation rule was intended for non-exempt welfare benefit funds than for VEBAs, we infer that Congress was assuming that an employer could elect to aggregate two or more VEBAs, or one or more VEBAs, and one or more non-exempt funds under section 419A(h)(1)(B) for purposes of calculating UBTI under section 512(a)(3).

⁴Sherwin-Williams Co. Employee Health Plan Co. Trust, 330 F3d 449 (6th Cir. 2003)

⁵In effect, the court sub silentio invalidated the regulation, without discussing how it might lie beyond the scope of the IRSs authority or conflict with the text of the statute.

⁶Taxpayers outside the Sixth Circuit could take the position on a currently filed return. However, if this case is relied on to avoid UBIT, disclosure may be required, as this calculation is in disregard of a regulation.

⁷Wells Fargo & Co., 120 TC 69 (2003).

⁸In Wells Fargo, id., the court opted for the level-premium method, because it ensures that each employees benefit will be fully funded by the time that he or she reaches retirement and it starts the funding period with the establishment of the trust (rather than earlier, as with the entry-age normal method). That conclusion is most congruent with the legislative history and will be difficult to overturn on appeal.

⁹Rev. Rul. 2003-62, IRB 2003-25, 1034.

¹⁰IRS Letter Ruling 200302032 (1/10/03).

¹¹IRS Letter Ruling 9104050 (11/1/90).

¹²ERISA Section 3(40) allows states to regulate multiple-employer welfare arrangements (MEWAs) under their insurance laws, but excepts collectively bargained MEWAs from state jurisdiction.

¹³Notice 2003-24, IRB 2003-18, 853.

¹⁴68 FR 17471 (4/9/03).

¹⁵TD 9079 (7/17/03).

¹⁶The IRS issued the proposed regulations last year to shut down abusive arrangements after years of semi-satisfactory litigation; see Robert D. Booth, 108 TC 524 (1997); Neonatology Associates, P.A., 115 TC 43 (2000), affd, 299 F3d 221 (3d Cir. 2002).

¹⁷See Sec. 83(a) and Regs. Sec. 1.83-7(a) and -1(b)(1).

¹⁸Rev. Rul. 60-31, 1960-1 CB 174.

¹⁹Notice 2003-47, IRB 2003-30, 132.

²⁰TD 9067 (7/2/03).

²¹Temp. Regs. Sec. 1.83-7T(a) states, a sale or other disposition of [an] option to a person related to the service provider is, per se, not at arms length. Related person is as defined by Secs. 267(b) and 707(b)(1), with some modifications (a 20% rather than a 50% ownership test and inclusion in the family of all spouses of family members). In no case, however, is the option grantor or the entity for which the services are performed treated as a related person.

²²Rev. Rul. 2003-98, IRB 2003-34, 378.

²³TD 9083 (8/4/03).

²⁴Rev. Proc. 2003-68, IRB 2003-34, 398.

²⁵Rev. Proc. 98-34, 1998-1 CB 983.

²⁶TD 9092 (9/17/03).

²⁷Notice 2002-8, IRB 2002-4, 398.

²⁸REG-164754-01 (5/9/03).

²⁹TD 9075 (7/11/03).

³⁰The final regulations are generally effective for tax years beginning after 2001. Strict compliance with the provisions that reflect the Economic Growth and Tax Relief and Reconciliation Act of 2001s amendments to Sec. 457 is not mandatory until tax years beginning after 2003; until then, good-faith compliance with the statute is sufficient.

³¹REG-122917-02 (6/9/03).

³²James G. Robinson, 335 F3d 1365 (Fed. Cir. 2003).

³³Venture Funding, Ltd., 110 TC 236 (1998), affd, 198 F3d 248 (6th Cir. 1999), cert. den.