Document: 508 U.S. 152 113 S.Ct. 2006 124 L.Ed.2d 71 COMMISSIONER OF INTERNAL REVENUE, Petitioner,v.KEYSTONE CONSOLIDATED INDUSTRIES, INC. No. 91-1677. Argued Feb. 22, 1993. Decided May 24, Syllabus * Respondent company, which maintained several tax-qualified defined benefit pension plans for its employees during the time at issue, contributed a number of unencumbered properties to trust fund supporting and then credited properties' fair market value against minimum funding obligation under Employee Retirement Income Security Act 1974 (ERISA). Petitioner, Commissioner Internal Revenue, ruled that respondent owed substantial excise taxes because transfers were "prohibited transactions" 26 U.S.C. § 4975(c)(1)(A), bars "any direct or indirect . sale exchange property between plan disqualified person" such as employer covered by plan. The Tax Court disagreed entered summary judgment on petition redetermination, Appeals affirmed. Held: When applied an employer's obligation, contribution is prohibited "sale exchange" 4975(c)(1)(A). Pp. ____. (a) well-established income tax rule transfer in satisfaction monetary exchange," see, e.g., Helvering v. Hammel, 311 504, 61 368, 85 L.Ed. 303, applicable That latter section forbids debt demonstrated prohibition not merely but exchange." least both type form exchange, since exchanged diminution obligation. [SC2Q!]] (b) foregoing construction necessary accomplish 4975's goal bar categorically transaction likely injure A poses various potential problems plan—including shortage funds pay promised benefits, assumption primary any encumbrance, overvaluation employer, property's nonliquidity, burden cost disposing property, substitution own investment policy—that are solved 4975. P. (c) erred reading 4975(f)(3)—which states "by person shall be treated if subject mortgage similar lien"—as implying cannot 4975(c)(1)(A) unless encumbered. legislative history demonstrates Congress intended 4975(f)(3) expand, limit, 4975(c)(1)(A)'s scope extending reach include contributions encumbered do satisfy obligations. Commissioner's 4975 sensible one. like has plan, while neither nor satisfies presents far less causing loss 951 F.2d 76 (CA5 1992), reversed. BLACKMUN, J., delivered opinion Court, REHNQUIST, C.J., WHITE, O'CONNOR, KENNEDY, SOUTER, THOMAS, JJ., joined, all Part III-B SCALIA, joined. STEVENS, filed dissenting opinion. Christopher J. Wright, Washington, DC, petitioner. Raymond Wexler, Chicago, IL, respondent. Justice BLACKMUN Court.* 1 In this case, we concerned with legality Specifically, must address question whether contribution, when so thereby incurs imposed statute. 2 "defined plan," name implies, one where employee, upon retirement, entitled fixed periodic payment. size payment usually depends prior salary years service. more common contrast, typically contributes percentage payroll profits individual employee accounts. Upon his account. See 29 §§ 1002(34) (35). 3 If either qualifies favorable treatment, purposes, may deduct current plan; retiree, however, taxed until he receives from 402(a)(1) 404(a)(1). II 4 facts pertinent resolving present litigation dispute. During taxable ended June 30, 1983, through 1988, inclusive, Keystone Consolidated Industries, Inc., Delaware corporation principal place business Dallas, Tex., plans. These requirements prescribed 302 (ERISA), Pub.L. 93-406, 302, 88 Stat. 869, amended, 1082. also 412. funded Master Pension Trust. 5 On March 8, Trust five truck terminals having stated $9,655,454 time. fiscal 1982 1983. 13, 1984, certain Key West, Fla., real $5,336,751 year 1984. times their transfers. Neither was West property. Their respective values challenged here. 6 claimed deductions federal returns It reported capital gain, difference basis each value. Thus, disposal asset. 1222. 7 Section Revenue Code, 4975, added 2003(a) ERISA. 971. imposes two-tier tax1 specified "disqualified person." Among persons" listed statute 4975(e)(2)(C). transactions 8 who petitioner here, respondent's sales exchanges This ruling resulted determined deficiencies first-tier liability $749,610 1984 $482,773 1983 1985-1988, inclusive. incurred second-tier amount 1988. 9 timely redetermination United States Court. court, unreviewed cross-motions judgment, favor. 60 TCM 1423 (1990). 10 acknowledged "there abuse allowing transferred requirements." Id., 1424. Nonetheless, it did agree case constituted rejected attempt analogize recognition considered issue "separate distinct recognition." TCM, 1425. 11 drawing distinction, cited 4975(f)(3). specifically lien." court observed: "Since describes personal purposes definitional concerns 'sale exchange' removed general definitions found other areas law." thus seemed say limits only prohibited. 12 argument contributing noncash position exert unwarranted influence over Trust's policy. court's answer trustee "can dispose of" noted earlier had distinction fulfill Wood Commissioner, 95 T.C. 364 (1990) (unreviewed), rev'd, 955 908 (CA4), cert. granted, --- ----, 112 2937, 119 562, dism'd, 3061, 120 930 (1992). 13 Fifth Circuit read "implying lien, 78. expand definition obligations; view, no involuntary voluntary anywhere Code." F.2d, reasoned: "If "would superfluous." "irrelevant," "[s]ection enacted measure economic income." 79. 14 views deference, despite fact Service Department Labor administer ERISA's prohibited-transaction provisions. been set out formal regulation, Labor's advisory binding "on parties thereto, precedential effect." Ibid. 15 view conflict Fourth Circuit's decision Wood, see 913, litigation, cases decided within two weeks other, granted certiorari. 562 III 16 complicated But much language, side, before us comes into better focus. acknowledges respect Our task, then, determine therefore transactions. A. 17 well established See, 303 (1941). B. Bittker & L. Lokken, Federal Taxation Income, Estates Gifts, ¶ 40.4, p. 40-11 (2d ed. 1990). seems clear, therefore, constituted, laws, those Circuit, supra, "[W]e aware instance term used interpreted indebtedness." 913. 18 logic equally phrase acquired settled judicial administrative interpretation course half century even broader statutory language presumptively consistently construed Albernaz States, 450 333, 340-343, 101 1137, 1142-1144, 67 275 (1981). "normal construction," Sorenson Secretary Treasury, 475 851, 860, 106 1600, 1606, 89 855 (1986), "identical words different parts same act have meaning." Atlantic Cleaners Dyers, Inc. 286 427, 433, 52 607, 609, 1204 (1932). Further, "the Code given 'as great internal symmetry consistency permit.' " Lester, 366 299, 304, 81 1343, 1346, 306 (1961). Accordingly, construe proper accept already meaning 19 Even possessed meaning, still would clear prohibits debt. barred something more, namely, B 20 We note, too, statute's broad Congress' goal. Before enactment 1974, governed sponsor customary arm's-length standard conduct. provided open door abuses sponsor's inflated price overvalued nonliquid. response these included 406(a)(1)(A), 1106(a)(1)(A), addition Code. 21 S.Rep. 93-383, pp. 95-96, U.S.Code Cong. Admin.News 4639. jeopardize ability benefits. supra. Such frees cash restricting use trust. Overvaluation, policy, obvious considerations. Although encumbrance unique about overvaluation, need maintain independent policy animate regardless long giving up account receivable runs risk than getting return valuable burdensome been. 22 harmful effects illustrated though There exclusive sales-listing agreements made terminals; called commissions. presence requirement easy costless properties. Chicago terminal, example, sold three after 23 solved, suggested, mere imposition 4971. prevents abuses. C 24 Appeals' conclusion appears "is feel provision. extends H.R.Conf.Rep. 93-1280, 307 (1974). provide additional protection, limit protection 4975(c)(1)(A).2 25 plan.3 IV 27 ordered. 28 dissenting. For reasons opinions (1990), Appeals, I am persuaded add observations. 30 holding draws indebtedness Ante, established, fund, done voluntarily pursuant is, Tasty Baking Co. 393 992, 184 Ct.Cl. 56 (1968); A.P. Smith Manufacturing 831, 176 1074 (1966); General Shoe Corp., 282 (CA6 1960); Rev.Rul. 75-498, 1975-2 Cum.Bull. 29. indeed our focus answering presented Congressional understanding relates determination gain loss, seem follow Congress, enacting very mandatory advocates today embraces. alternative, course, recognize, intend import developed context measuring taxpayer's disposition 79; hold.* 31 properly associated ante, worth noting, mitigated trustees right—indeed, duty —to refuse disadvantageous generally 1104. Indeed, there situations disables accepting consideration contrary best interests can easily imagine situation trustees, acting prudently beneficiaries, prefer undervalued piece opposed selling third party discount satisfying cash. Though majority's plausible, restrict employers trustees. 32 respectfully dissent. syllabus constitutes part prepared Reporter Decisions convenience reader. Detroit Lumber Co., 200 321, 337, 282, 287, 50 499. SCALIA joins "5 percent involved." 4975(a). "100 4975(b). "amount involved" greater money received. 4975(f)(4). avoided correction completion concerning tax. 4961(a), 4963(b) (e), 6213(a), 7481(a). expanded coverage following example. An outstanding obligations wishes contribute reward especially productive Under analysis, permissible unencumbered, will "exchanged" does fall hand, impermissible encumbered, passing, amicus argued strenuously should afford deference agencies charged administering it. Brief Petitioner 29-32; 39-42; Reply 18-20; Benefit Guaranty Corporation Amicus Curiae 10-13. appear taken sponsoring exchange. Advisory Opinion 81-69A, issued July 28, 1981; 90-05A, 29, 1990; Rev.Rule 81-40, 1981-1 508; 77-379, 1977-2 387. result without reliance deference. Because nature limitations rulings, express they resolution deferred another day. defense position, argues inconsistency relying latter, argues, "between plan" whereas relevant provisions refer 1001(c); By reasoning, determining argument, my places weight reasonably bear. asks hypothesis drew body law regarding terms context, words, departed usage roundly itself. Again, find attributed

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