[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.404(d)-1T]

[Page 461]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.404(d)-1T  Questions and answers relating to deductibility of 

deferred compensation and deferred benefits for independent contractors. 
(Temporary)

    Q-1: How does the amendment of section 404(b) by the Tax Reform Act 
of 1984 affect the deduction of contributions or compensation under 
section 404(d)?
    A-1: As amended by the Tax Reform Act of 1984, section 404(b) 
clarifies that section 404(d) shall govern the deduction of 
contributions paid and compensation paid or incurred by a payor under a 
plan, or method or arrangement, deferring the receipt of compensation or 
providing for deferred benefits for service providers with respect to 
which there is no employer-employee relationship. In such a case, 
section 404 (a) and (b) and the regulations thereunder apply as if the 
person providing the services were the employee and the person to whom 
the services are provided were the employer. Section 404(a) requires 
that such a contribution or compensation be paid or incurred for 
purposes of section 162 or 212 and satisfy the requirements for 
deductibility under either of those sections. However, notwithstanding 
the above, section 404 does not apply to contributions paid or accrued 
with respect to a ``welfare benefit fund'' (as defined in section 
419(e)) after June 18, 1984, in taxable years of employers (and payors) 
ending after that date. Also, section 463 shall govern the deduction of 
vacation pay by a taxpayer that has elected under such section. For 
rules relating to the deduction of contributions paid or accrued with 
respect to a welfare benefit fund, see section 419, Sec. 1.419-1T and 
Sec. 1.419A-2T. For rules relating to the deduction of vacation pay for 
which an election is made under section 463, see Sec. 301.9100-16T of 
this chapter and Sec. 1.463-1T.

[T.D. 8073, 51 FR 4322, Feb. 4, 1986, as amended by T.D. 8435, 57 FR 
43896, Sept. 23, 1992]

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