Before SCHNACKENBERG, PARKINSON and CASTLE, Circuit Judges.
PARKINSON, Circuit Judge.
The petitioning taxpayers, Wesley Heat Treating Co. (Heat), Spindler Metal Processing Co. (Metal), and Wesley Steel Treating Co. (Steel), all Wisconsin corporations having stockholders and officers in common, seek reversal of the decision of the Tax Court determining deficiencies in income, excess-profits and declared excess-profits tax for various years from 1942 to 1946, inclusive.*fn1
The enactment of the 1942 Revenue Act gave rise to the controversy here. Prior thereto amounts contributed by employers to trusts for the benefit of employees were deductible under § 23(a) or (p) of the 1939 Revenue Code, 26 U.S.C.A. § 23(a, p). However, § 23(p) was amended by the 1942 Act and several provisions were added, in part relevant here as follows:
"(1) * * * If contributions are paid by an employer to or under a stock bonus, pension, profit-sharing, or annuity plan, or if compensation is paid or accured on account of any employee under a plan deferring the receipt of such compensation, such contributions or compensation shall not be deductible under subsection (a) [ § 23(a)] but shall be deductible * * * under this subsection but only to the following extent:
"(D) In the taxable year when paid, * * * if the employees' rights to or derived from such employer's contribution or such compensation are nonforfeitable at the time the contribution or compensation is paid."
During the 1920's Steel inaugurated a profit-sharing program whereby the employees were paid a base salary and received extra compensation in the form of bonuses based upon a share of its profits. At the close of 1940 Steel, in addition to a current payment bonus plan, entered into a written trust agreement with certain named individuals as trustees wherein a trust fund was established for the benefit of such employees of the company as might be entitled to receive proceeds and avails thereunder in the sole judgment and discretion of the trustees and to be paid the following year or later to such employees of the company as the trustees saw fit to select. Similar trust agreements were executed at the close of each of the succeeding years in issue by Steel, Heat and Metal, the amount of profit to be shared having been determined by their respective officers prior thereto on the basis of estimated profit for the year. Other than the difference in amounts and dates, said trust agreements read as follows:
"Memorandum of Agreement made and entered into this 30th day of December, 1941, by and between the Wesley Steel Treating Company, hereinafter for convenience referred to as the Company, and Michael Strzeminski, Anna Gough, Catherine Hauer, Paul C. Hushek Arthur H. Nuesse, ], ], hereinafter for convenience referred to as the trustees.
"For and in consideration of the covenants hereinafter contained, the company does, coincident with the execution of this agreement, transfer and pay to the trustees the sum of Seventy-Five Thousand and no/100 Dollars ($75,000.00) dollars, the receipt of which is hereby acknowledged, to be held by the said trustees in trust for the benefit of the employees of the company for the following uses and purposes, towit:
"It is understood and agreed that the fund created and received by the trustees hereunder shall constitute an irrevocable trust and shall be used and administered for the benefit of such employees of the company as may be entitled to receive proceeds and avails hereunder in the sole judgment and discretion of the trustees.
"The funds held by the trustees shall from time to time, during the year 1942, if possible, and subject to the final clause of this paragraph be paid to such employees of the company as they may see fit to select, in such installments in such amounts as may in their discretion be advisable, provided however, that the entire trust fund of Seventy-Five Thousand and no/100 ... ($75,000.00) dollars, shall be paid to said employees within and during the year 1942, unless in the judgment of the trustees it shall be inadvisable so to do by reason of extreme changes in the National economy, war, riot, civil commotion, or act of God, or other unusual circumstance.
"Payments made out of said trust fund to employees shall be considered to be in the nature of a bonus, and shall have no relation to any regular wage or pay scales of the company and shall not be in any manner construed to constitute any advance or alteration of any kind in any established wage scale.
"The trustees shall act without compensation for their services as such trustees, but they shall not be barred or restrained from sharing in any distribution of the proceeds of the trust fund as employees of the company, and any one of said trustees shall have full power and authority to disburse ...