Court Opinion

ID: 4597082
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:18:26.515512+00
Date Added: 2024-06-11T07:51:43.962949
License: Public Domain

Roberts Filter Manufacturing Company, Petitioner, v. Commissioner of Internal Revenue, RespondentRoberts Filter Mfg. Co. v. CommissionerDocket No. 7256United States Tax Court10 T.C. 26; 1948 U.S. Tax Ct. LEXIS 297; January 8, 1948, Promulgated *297 Decision will be entered for the respondent.  Petitioner, fearing the loss of its essential and experienced employees to war industries paying higher wages, established an employees' beneficial trust fund of $ 40,000 in 1941 to provide pensions, severance payments, disability allowances, grants in aid for emergencies, personal loans, death benefits, and other benefits for employees of at least five years' service.  The investment and expenditure of the fund was under the exclusive direction of a board of five managers, which included two of petitioner's officers.  Held, the $ 40,000 payment is not deductible as compensation paid for services rendered nor as an ordinary and necessary expense paid or incurred in 1941 in carrying on petitioner's trade or business.  David Stock, Esq., for the petitioner.Wm. H. Best, Jr., Esq., for the respondent.  Arnold, Judge.  Black, J., dissenting.  Harron, Kern, and Johnson, JJ., agree with this dissent.  ARNOLD *27  The petitioner alleges that the respondent erred in disallowing a deduction from gross income claimed on the petitioner's return for 1941 for the amount of $ 40,000 paid into a trust fund created for the benefit of the petitioner's employees.  The respondent determined deficiencies of $ 5,826.10 in corporation income tax, $ 2,495.36 in declared value excess profits tax, and $ 16,519.23 in excess profits tax for the year 1941.  The facts are found as stipulated.  Such facts are stated herein to the extent necessary for the purposes of this opinion, together with other facts found from the evidence.FINDINGS OF FACT.The Roberts Filter Manufacturing Co. is a corporation organized under the laws of the State of Pennsylvania, with principal offices at Darby, Pennsylvania.The petitioner filed its corporation income*299  and declared value excess profits tax return and its corporation excess profits tax return for the taxable year 1941 with the collector of internal revenue at Philadelphia, Pennsylvania.  The corporation's books were kept and its tax returns were filed on the accrual basis and the calendar year basis.The petitioner is engaged in the business of designing, manufacturing, constructing, and erecting equipment for filtration plants for municipalities and industries.The petitioner's board of directors on December 22, 1941, adopted a resolution authorizing the executive officers to execute and deliver an instrument of trust.  On December 31, 1941, pursuant to such resolution, the president and secretary of the petitioner executed an instrument of trust with the Corn Exchange National Bank & Trust Co., of Philadelphia, as trustee.  The instrument provided, in part:* * * That the corporation has simultaneously with the execution of this agreement by the Trustee delivered to and deposited with the Trustee as an initial deposit and payment under the terms of this agreement, the sum of Forty thousand dollars ($ 40,000) (of which Fifteen thousand dollars ($ 15,000) has been paid in cash and*300  the balance by a promissory note or notes, payable within six (6) months, with interest at 4%, in cash or by transfer of five hundred (500) shares of the Company's 4% non-cumulative non-voting *28  preferred stock, par value $ 50.00, callable at $ 52.50), the receipt of said cash and note being hereby acknowledged by Trustee, for the formation of the Trust Fund, which is designated and may be known as the "Employees' Beneficial Trust Fund of the Roberts Filter Manufacturing Company", and shall be established and maintained for the sole and exclusive benefit of employees of the Roberts Filter Manufacturing Company as hereinafter provided.  The Trustee agrees to accept under the terms of this agreement the said amount and such additional amounts as may hereafter be tendered to it by the Company or its successors as hereinafter defined, all of which shall be held and administered by it In Trust For the Following Uses and Purposes:Effective Date and Fiscal YearI. The plan shall take effect on the date of this agreement and the fiscal year of the Plan shall hereafter begin on January 1st of each year and end on December 31st of the same year.ParticipationII. All of the present *301  employees of the Roberts Filter Manufacturing Company (excluding the President, Vice-President, any employee having any interest in the Estate of Jesse W. Roberts, deceased, and any employee who shall have been hired by the Company after attaining the age of sixty (60) years) who shall have or shall attain five (5) years of continuous service in the employ of the Company, shall become Participants in this Beneficial Trust Plan and shall during the period they continue in such employment be entitled to such benefits as are hereinafter provided or contemplated under the general purposes of this Trust.  A definitive list of Participating Employees shall be certified by the Company to said Trustee and to the Board of Managers contemporaneously with the execution hereof, which list shall be amended from time to time to include all such employees attaining five (5) years' service and to exclude persons ceasing to be employed by said Company; and no person not included on such list shall be entitled to benefits hereunder.The FundIII. The Fund shall consist of the Trust res hereinbefore referred to, and any increase thereof by future contributions, and by increments due to income or profits. *302  The net income of the Fund for each fiscal year, after payment of all expenses and proper charges against the same, under the terms hereof, shall be accounted for separately, and shall be first used to the extent required to meet the disbursements to Participating Employees authorized from time to time by the Board of Managers, and any balance thereof in excess of immediately prospective requirements may be transferred to Principal; but nothing herein contained shall be taken to preclude the use of Principal to the extent required for such disbursements.* * * *Board of ManagersVII. A Board of five (5) Managers shall be selected from time to time in the following manner:Two (2) members of such Board shall be the President and Vice-President of the Roberts Filter Manufacturing Company; one member shall be an employee from said Company who shall have completed ten years or more of service in the employ of the Company; one member shall be an attorney at law, preferably *29  the attorney for said Company; and the fifth member may be a person associated with or designated by the Corporate Trustee, or other person who shall have experience in investment.  The first Board of Managers*303  shall be: Charles V. Roberts, Charles F. Thomas, F. R. Haddock, E. Wallace Chadwick, Esq., and Edgar W. Freeman.In case of death, resignation, removal or inability of any of said members to act, a majority in number of the remaining members of the Board shall select a successor or successors from among persons having the qualifications above prescribed.  A majority in number of the members of the Board shall at any time have power to remove any one or more of such Managers and fill such vacancy or vacancies in the manner hereinabove prescribed in the case of the existence of a vacancy by reason of death, resignation, removal or inability to act.  A written instrument or certificate shall be executed by the majority of the remaining members to certify the selection of a successor or successors to fill any vacancy or vacancies existing in the Board of Managers.Any decision made or instruction given by a majority of the Board as at any time constituted shall have the same force and effect as if given by them unanimously, * * ** * * *Beneficial Provisions of the TrustVIII. The general purposes of this Trust, to which all the subsequent provisions of this Instrument are intended to*304  conform, is to make available to the Participating Employees certain additional benefits and security hereinafter mentioned, growing out of beneficial group interest hereunder, and designed and intended to supplement their individual resources in cases of need during their periods of employment and at the termination thereof.  In making these provisions it is deemed desirable to vest in the Board of Managers very considerable discretion, with the expectation that they and their successors will discharge this responsibility with sympathy and discretion, so as to assure to the Participating Employees individually as large a measure of benefit as the circumstances of each case may warrant, having always in view the resources of the Fund and the general interest of the whole group of Participants.  It is within the contemplation of this Trust that the entire Fund may at some future time become exhausted by disbursements made hereunder, and such exhaustion shall not be regarded as contrary to the purposes hereof -- it being contemplated that the interest of the Participating Employees as a group are effectively served by the protection which will be continuously afforded during the period*305  of operation of the Trust.The Board of Managers is hereby authorized to direct disbursements by the Trustee from the Fund for the following beneficial purposes, among others:1. Monthly allowances in the nature of a pension to Participating Employees who shall be retired by the Company from employment after reaching the age of 65 years.  The amount of such allowance in each case shall be fixed by the Board, and may be increased or decreased from time to time. In fixing the amount so allowed the Board will take into consideration any or all of the following factors: Length of service to Company; regular rate of pay; the individual resources of the beneficiary, including Social Security and similar rights; and in exceptional circumstances, the personal or family needs and requirements of beneficiary.2. The Board of Managers may hereafter set up and from time to time revise and change a schedule or schedules of pension and/or other allowances hereunder, based upon the regular salary or wages of Participating Employees and/or length of service, and subject to deductions for Social Security or other benefits from sources outside this Trust; to which schedules the Board shall aim to *306  comply, but *30  which schedules shall not supersede the right of the Board to fix, alter or terminate any allowance made under this Trust.3. Severance or dismissal allowances, based on the foregoing factors and upon the circumstances surrounding the termination of employment, may be made to Participating Employees who may leave the Company's employment either by resignation or dismissal.  Such allowances shall not during the first year's operation exceed six weekly payments, nor more than half the beneficiary's regular weekly rate of pay, and shall not be made to any employee with less than ten (10) years' service to the Company, provided that these limitations or any of them may be thereafter altered and either raised or lowered by the Board, in the light of further experience.  There shall be no duplication of benefits under this and the immediately preceding paragraph.  No severance or dismissal allowance shall be made to any employee who has been dismissed for misconduct, or neglect of duty, unless such employee has had more than twenty (20) years of service, and the Board shall find mitigating circumstances surrounding such dismissal for cause.  Allowance under this paragraph*307  shall terminate immediately upon the beneficiary's finding other employment, at a rate of pay at least equal to the allowance, and may be terminated at any time at the Board's discretion.4. Disability benefit allowances may be granted to Participating Employees in weekly amounts to be fixed by the Board on the same basis of consideration as provided in paragraph 1 of this Section, and taking into account also any Workmen's Compensation or insurance to which beneficiary may be entitled, in the case of total or partial disability, whether due to accident, illness or other cause not attributable to beneficiaries' own persistent or violent misconduct, of which latter condition the Board shall be the sole judge.  Allowances under this paragraph to any individual shall not exceed in total one-half of beneficiary's regular yearly salary in any one year.5. Grants in aid, which may be allowed to any Participating Employee, in amounts to be fixed by the Board, payable either in a lump sum or installments, in the event of a personal catastrophe, involving the uninsured loss of property, or of the death or illness of a dependent involving expenses beyond beneficiary's own resources, or any *308  legal liability involving loss of property or legal rights not arising out of beneficiary's wilful misconduct, or other disastrous eventuality effecting beneficiary's efficiency.  Such allowances may be made absolutely, or as an advance or loan to beneficiary. If made as a loan, Managers may require beneficiary to give his note therefor, with interest at three (3) per cent.  Beneficiary shall not be entitled to receive any other benefit under this Trust until such loan is fully repaid, except that in case of such beneficiary's retirement or total disability, allowance may be made as hereinbefore provided, subject to the repayment thereout of any balance of loan remaining unpaid.6. Personal Loans.  The Board of Managers may authorize Trustee to make loans to Participating Employees from the Fund, for proper purposes, and in amounts to be fixed by the Board of Managers, on such terms of payment as the Board shall prescribe, and either without other security or upon such security or endorsement of guaranty as the Board may require.  Such loans shall be regarded as investments of the Fund and shall be evidenced by beneficiary's note to Trustee, shall bear interest at three per cent and*309  shall not exceed in total to any one individual Three Hundred ($ 300.00) dollars or fifteen (15) per cent of beneficiary's regular annual wage, whichever shall be higher.  No participating Employee whose note is in default shall be entitled to receive any other benefit under this Trust until such note is paid in full except an allowance for a pension or total disability, in which case the allowances shall be subject to the repayment thereout of any balance due the Trustee hereunder.7. In the event that the resources of the Trust shall hereafter permit, the *31 Board of Managers are expressly authorized, with the approval of the Company, to establish and provide death benefit allowances, in such amounts as the Board shall fix in particular cases, payable in the Board's discretion either to the undertaker or other person who shall provide for the funeral of the Participating Employee, or to any doctor, hospital, or nurse who shall have treated him, or to his widow, or children, or other dependents, or to be divided among two or more of them, as the Board shall determine.8. Other Benefits.  The recital of the above benefits shall not be construed as necessarily precluding the *310 Board of Managers from making other proper and reasonable allowances to Participating Employees not expressly or inferentially authorized above, provided such allowances are to meet actual needs not now foreseeable and are in substantial conformity with the general purposes of this Trust, and provided that in every such case there shall be deposited in the shop and office of Company a concise statement of the amount so allowed and the salient facts, but not necessarily including the name of the beneficiary.9. Under no condition shall any part of the Fund ever be paid over to or used directly or indirectly for the benefit of the Company, the only benefit to the Company being that indirectly arising from the general effect of the Plan upon the stimulation of interest of the Participants in the management and development of the Company's business and securing their permanent interest and loyalty in the organization.* * * *XVII. It is the purpose of this agreement that the Company's contributions to the Trust herein established represent additional compensation to the Participating Employees in recognition of their vauable services and this form of compensation is provided in their *311  best interests.  It is not the intent of this agreement to establish a pension trust as contemplated by section 23 (p) of the Internal Revenue Code, since the Company does not consider its financial resources to be such that it can at the present time undertake a commitment of such character.  It is the Company's intent, however, to comply fully with the provisions of the Internal Revenue Code to the end that its contributions to the Trust herein established be exempt from tax, either under the provisions of section 165 or other sections of the Code, and that such contributions be allowed as deductible expenses of the Company as of the date made.The instrument also provided for investment of the trust corpus as might be directed by the board of managers, and authorized investment in notes or stock of the company.  It further provided that the trustee was to collect the income, pay administration expenses, and disburse the net income and principal in accordance with the directions of the board of managers; that no participating employees were to be required or permitted to make payment in consideration of receiving any benefit; that the trust might be dissolved by order of the board*312  of managers, ratified by two-thirds of the then participating employees and with the consent of the company; that a successor company might, by special assignment, succeed to the incidents of the trust, so far as they affect the company; and that upon dissolution the fund should be distributed to the then participating employees in such equitable manner as the board of managers should determine.  There were provisions for resignation or removal of the trustee and appointment of a successor, for permitting additional contributions *32  by the company to the fund, and for amendments to the agreement, with the proviso that no amendment may cause the principal or income of the fund to inure in whole or in part to the company.The petitioner, on December 31, 1941, paid to the trustee $ 15,000 in cash and delivered its promissory note for $ 25,000, as provided in the instrument.  The note was satisfied on January 2, 1943, by delivery to the trustee of 500 shares of petitioner's noncumulative, nonvoting preferred stock.  This stock had a value of $ 25,000 when delivered and would have had that value on December 31, 1941, if issued then.The petitioner, as of December 31, 1941, had 42*313  employees of over 5 years' service eligible to participate in the trust.  These employees had an average service of 18 years in petitioner's employ.  Through many years' training in the highly technical work of the petitioner they had become specialists in this work and were essential to the petitioner in carrying out its contracts.  The success of the business was dependent upon their knowledge and abilities.  Because of the necessity of keeping its organization intact and to preserve its business the petitioner could not afford to and did not release these employees during periods of poor business and did not reduce their wages at such times.  Because of this it paid lower wages than other corporations which had not stabilized employment.  With the advent of wartime rates of pay in nearby establishments the petitioner's employees became dissatisfied, and the company faced the hazard of losing its best and most experienced men to industries which could pay higher wages. The petitioner's executives held the view that increasing the wages of its employees or paying a bonus would make it difficult to maintain such payments in future depressed periods.  They considered various plans*314  for providing benefits for employees as inducements to keep them with the company.  In their estimation a plan requiring a commitment to a fixed annual payment could not be maintained in the future.  They decided to adopt a plan for the payment of an amount into a trust fund to which future payments could be made at the company's option, which fund could be administered for the benefit of its more experienced and essential employees.The members of the board of managers named in the trust instrument were Charles V. Roberts, president of the petitioner; Charles F. Thomas, vice president of the petitioner; E. Wallace Chadwick, attorney for the petitioner; F. R. Haddock, chief engineer of the petitioner; and Edgar W. Freeman, vice president of the Corn Exchange National Bank & Trust Co., the trustee under the agreement.The petitioner claimed a deduction on its corporation income and declared value excess profits tax return for 1941 under "Other Deductions" for "Extra compensation to employee -- beneficial trust -- $ 40,000."The petitioner during the taxable year paid its employees (other *33  than officers) the amount agreed upon as compensation for services, amounting to $ 118,627.35, *315  and bonuses amounting to $ 15,675.81.During the year 1942 the petitioner, with the approval of the War Labor Board, increased the wages of its employees by 10 per cent.The $ 40,000 payment to establish the trust fund was not compensation paid for personal services actually rendered, nor was it an ordinary and necessary expense paid or incurred by the petitioner in 1941 in carrying on its trade or business.OPINION.The petitioner claims the deduction of $ 40,000 paid in 1941 into a trust fund for the benefit of its employees as an ordinary and necessary business expense. It does not contend that the amount is deductible under section 23 (a) as reasonable compensation paid for services rendered or under section 23 (p) as a contribution to a pension trust.  It contends that the payment was an ordinary and necessary business expense, deductible under section 23 (a) because the establishment of the trust was the best means of preventing the loss of a substantial number of its specially trained employees and the consequent disruption of its business.  The respondent disallowed the deduction "for the reason that it has not been established that the item is allowable under any provision*316  of the Internal Revenue Code authorizing deductions from gross income."The allowance of deductions from gross income is a matter of legislative grace, and only as there is clear provision therefor can any particular deduction be allowed.  New Colonial Ice Co. v. Helvering, 292 U.S. 435">292 U.S. 435.Section 23 (a) of the Internal Revenue Code allows deductions from gross income for "all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered." The petitioner intended this payment as compensation.  In paragraph XVII of the trust agreement it was declared:It is the purpose of this agreement that the Company's contributions to the Trust herein established represent additional compensation to the Participating Employees in recognition of their valuable services and this form of compensation is provided in their best interests.Disbursements could be made only to or for the account of participating employees.  Such disbursements would be made solely as a consequence of the employer-employee relationship. *317  They would therefore be remuneration for services and hence compensation.The principal purpose of the payment was to induce the employees to remain with the company and perform services in the future.  If *34  the employee does this he is eligible to receive benefits.  In this aspect the payment represents compensation set aside to pay for future services.  As such, it is not "compensation for services actually rendered," within the meaning of section 23 (a).  Under the terms of the trust no share was allotted to any employee and no specific right accrued to any employee.  Each qualified employee had only the knowledge that he might, in time of need, be granted some benefit if the managing board saw fit to do so.  Compensation paid connotes receipt of something by the persons compensated.  We think such a payment made by an employer to a trust fund for the benefit of its employees can not qualify for deduction as compensation paid unless some benefit or specified right or interest, even though forfeitable, accrued to the employees in the year of payment.  See Gisholt Machine Co., 4 T. C. 699; Forcum-James Co., 7 T. C. 1195;*318  and Surface Combustion Corporation, 9 T. C. 631. The payment here does not qualify as compensation paid. Accordingly, this payment is not deductible under section 23 (a) as compensation paid for personal services actually rendered.Section 23 (p) of the Internal Revenue Code, as effective in 1941, allowed an employer establishing or maintaining a pension plan to provide reasonable pensions for its employees to take certain deductions from gross income on account of contributions to a trust for that purpose, if the trust is exempt from income tax by reason of section 165 of the code.  There is no other statutory authority for an employer to deduct contributions to a trust established to pay deferred compensation to its employees.  In the absence of such authority, this payment to the employees' beneficial trust is not deductible, unless deductible in accordance with section 23 (p), or under section 23 (a) as compensation paid for services rendered. The petitioner does not claim a deduction pursuant to section 23 (p) and the trust agreement, in paragraph XVII, states that it is not intended to establish a pension trust as contemplated by that section. *319 The payment being compensation, but not deductible as compensation paid for personal services actually rendered or under section 23 (p) as a contribution to a pension trust, it may not in the alternative be deducted under section 23 (a) as an ordinary and necessary business expense of a character other than compensation.  The broad general language of a statutory provision must give way to an applicable specific provision in another part of the same enactment.  Ginsberg & Sons, Inc. v. Popkin, 285 U.S. 204">285 U.S. 204; United States v. Chase, 135 U.S. 255">135 U.S. 255. Section 23 (a) prescribes conditions under which compensation is deductible. It must be for personal services actually rendered; it must be reasonable; and it must be paid, or the liability for it incurred, in the taxable year. Where a compensation payment does not meet these conditions and therefore is not deductible *35  as compensation, to allow its deduction under the broader classification of ordinary and necessary business expenses would defeat the purpose of these conditions.Furthermore, this was not an ordinary and necessary expense, of a nature other than *320  compensation, of carrying on the petitioner's business.  The petitioner is contending, in effect, that establishing an employees' beneficial trust fund and paying into it a sum approximating one-third of its annual pay roll for their future benefit is an ordinary and necessary method of inducing a substantial number of its specially trained employees to remain in its employ and thus prevent the disruption of its business.  The evidence does not establish that such a course of action is a common and accepted method of employers generally, or in the petitioner's industry, of dealing with such a situation.  This proof is essential to the deduction upon this ground.  Welch v. Helvering, 290 U.S. 111">290 U.S. 111; Deputy v. DuPont, 308 U.S. 488">308 U.S. 488. No instance of a similar situation was shown, nor a case described in which similar action was taken.  Rather, the petitioner's problem appears to have been unique and the solution adopted unusual.Deductibility under section 23 (a) can be established only by showing that the outlay is within the statutory classification of "ordinary and necessary expenses" of carrying on the trade or business. *321  If the result of a payment is the acquisition of an asset which has an economically useful life beyond the taxable year, it may be a capital item rather than a deductible expense.  Whether a given expenditure is a capital outlay or an expense item depends in part upon the purpose and duration of function of what is acquired.  This expenditure was intended to benefit the petitioner by "the general effect of the Plan upon the stimulation of interest of the Participants in the management and development of the Company's business and securing their permanent interest and loyalty in the organization" (paragraph VIII, clause 9, trust agreement).  Although petitioner paid the amount irrevocably, it acquired by the trust instrument the right to have the fund administered for the prescribed purposes of the trust, and through its officers upon the board of managers it had a substantial voice in the expenditure of the fund.  The trust was calculated to result in a long standing business advantage to the petitioner, the effect of which would be felt for many years in the future, as the employees would continually be conscious that this fund was available for their benefit.  The investment in*322  the trust was more than a normal incident of carrying on petitioner's business.  The payment was made to improve the company's future relations with its employees, not to discharge an ordinary and necessary expense of the taxable year. To treat the payment as a charge against the income of a single year would disregard its purpose and the probable duration of the benefit to result from it.  It is more in the nature of a capital investment for *36  the future.  See Kauai Terminal, Ltd., 36 B. T. A. 893. Considering the language of the statute and the nature of the disbursements to which it commonly applies, this payment is not deductible as an "ordinary and necessary expense paid or incurred during the taxable year in carrying on" the petitioner's trade or business.In Lincoln Electric Co., 6 T. C. 37, we held that a payment of $ 1,000,000 into a profit-sharing trust to establish a fund to provide separation allowances, death benefits, or annuities for its employees or their families was not deductible as an ordinary and necessary business expense or as compensation paid for services rendered. The Circuit Court of *323  Appeals for the Sixth Circuit reversed, holding the payment to be deductible as an ordinary and necessary business expense. Commissioner v. Lincoln Electric Co., 162 Fed. (2d) 379. The problem here is similar in several respects.  A fundamental principle of income tax law is the annual accounting of profits and losses.  A taxpayer may not play good years against bad years by shifting income or expenses from one year to another.  To allow petitioner to take a deduction of $ 40,000 for 1941 for an amount which is to be paid as compensation to its employees in subsequent years would result in a distortion of petitioner's net income for 1941.  With all due deference to the Circuit Court, we adhere to the views we expressed in our decision in the cited case and prefer to follow that decision here.Decision will be entered for the respondent.  BLACK Black, J. dissenting: I dissent from the majority opinion because I think it is in conflict with our decisions in Gisholt Machine Co., 4 T. C. 699, and Surface Combustion Corporation, 9 T. C. 631, and with the decision of the Circuit Court*324  of Appeals for the Sixth Circuit, in Lincoln Electric Co. v. Commissioner, 162 Fed. (2d) 379, reversing us in Lincoln Electric Co., 6 T.C. 37">6 T. C. 37.In the Lincoln Electric Co. case when it was before our Court I dissented and rather fully stated my reasons why I thought such expenditures as were there involved were deductible as ordinary and necessary business expenses under our decisions in Gisholt Machine Co., supra, and other cases to which I referred.  I shall not repeat here what I said in that dissent.  I simply refer to my dissent in the Lincoln Electric Co. case for a more full statement of my views on the basic question involved.It is true, of course, as one would naturally expect, that there are certain differences of phraseology in the trust indentures involved in the Gisholt Machine Co. case, the Lincoln Electric Co. case, the Surface Combustion Corporation case, and the instant case.  However, such differences as exist are, in my opinion, unimportant insofar as tax *37  consequences are concerned and without controlling significance.  The real outstanding*325  purpose of the trusts in all four of these cases was to provide incentive payments which served to build up a loyal and efficient force of employees, that being an important factor in the success of the business of each of these taxpayers.In Lincoln Electric Co. v. Commissioner, supra, the circuit court well characterized the nature of such payments, I think, when it said:The incentive plan adopted and enlarged by the petitioner was not unique in the life of the group or the community of which it was a part.  Indeed, in view of its history it was not unique in the life of the specific industry affected.  The Tax Court on another phase of the controversy, observed that the benefit to employees was uncertain, indefinite and intangible and so illusory, that the taxpayer in fact retained the substance and granted only the shadow to its employees.  This colored all of its reasoning.  But old age security and benefits to one's family upon death, even with control of distribution lodged in a committee, are not illusory.  Provisions for old age security and unemployment insurance have in recent years challenged the best thought of the nation -- they*326  have enlisted the support of government itself.  * * * [Emphasis supplied.]It is payments similar in their nature as the court was discussing in the above quotation that are involved here.  Because the majority opinion denies to petitioner deduction of such payments as ordinary and necessary business expenses, I respectfully dissent.