In petitioner's claim that it was not obligated to pay tax on its investment income because it had spent that income on member benefits during the year, judgment of the United States Court of Federal Claims holding that a voluntary employees' beneficiary association (VEBA) may not avoid the limitation on exempt function income in 26 U.S.C. section 512(a)(3)(E)(i) by allocating investment income to the payment of member benefits is affirmed as, the language of the statute is clear and unambiguous in that CNG's investment income caused its total fund balances to exceed the statutory account limit, and as such, that investment income cannot be classified as exempt function income.
Appeal from: United States Court of Federal Claims
Decided December 14, 2009
Opinion by Mayer, Circuit Judge
For Appellant: Eric R. Fox, Ivins Phillips & Barker
For Appellee: Kenneth L. Greene, Appellate Section, Tax Division, U.S. Department of Justice