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 the trust fund supporting the plans and then credited the properties fair market value against its minimum funding obligation under the Employee Retirement Income Security Act of 1974 (ERISA). Petitioner, the Commissioner of Internal Revenue, ruled that respondent owed substantial excise taxes because the transfers to the trust were "prohibited transactions" under 26 U.S.C. 4975(c)(1)(A), which bars "any direct or indirect . . . sale or exchange . . . of . . . property between a plan and a disqualified person" such as the employer of employees covered by the plan. The Tax Court disagreed, and entered summary judgment for respondent on its petition for redetermination, and the Court of Appeals affirmed.

Held:

When applied to an employers funding obligation, the contribution of unencumbered property to a defined benefit plan is a prohibited "sale or ex