 Timing of deduction |
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 Apr 8 2008, 11:30 AM
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#1
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Registered User Group: Registered Posts: 71 Joined: 9-December 05 Member No.: 15,449  |
Sch C filer. Profit sharing plan. Accountant misses the deduction for the single employee, but takes the deduction for the owner in 2006. No wages or contribution in 2007. Can they take the deduction for the contribution for 2006 (actually made in 2007) on the 2007 Sch C - even if it creates a loss? Any different answer if it didn't create a loss?
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Apr 8 2008, 12:17 PM
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#2
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Registered User Group: Sitewide Moderator Posts: 3,354 Joined: 22-November 01 From: Orland, CA Member No.: 8,453 |
Can be done. No difference.
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Apr 8 2008, 02:15 PM
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#3
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Registered User Group: Registered Posts: 71 Joined: 9-December 05 Member No.: 15,449 |
I thought so. Thanks
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Apr 8 2008, 03:39 PM
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#4
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Registered User Group: Sitewide Moderator Posts: 3,306 Joined: 28-June 01 From: Phoenix Member No.: 7,413 |
Mike, can you elaborate on your answer as to why you think this is permissible? Would you say someone could make contributions for years and not take the deductions until one future year when the total deduction is taken irrespective of current earned income?
-------------------- "What's in the big salad?"
"Big lettuce, big carrots, tomatoes like volleyballs." |
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Apr 8 2008, 10:56 PM
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#5
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Registered User Group: Sitewide Moderator Posts: 3,354 Joined: 22-November 01 From: Orland, CA Member No.: 8,453 |
Oopsies... missed the "no compensation in the new year" thingy. Maximum deduction is 25% of current year compensation. Don't have *any*? Can't deduct it.
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| Guest_named_mjb_* |
Apr 8 2008, 11:05 PM
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#6
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Unregistered (or Not Logged In) |
QUOTE (Mike Preston @ Apr 8 2008, 11:56 PM)  Oopsies... missed the "no compensation in the new year" thingy. Maximum deduction is 25% of current year compensation. Don't have *any*? Can't deduct it. Why isnt a net opeating loss permitted for 2007? This post has been edited by mjb: Apr 8 2008, 11:06 PM |
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Apr 9 2008, 04:57 PM
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#7
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Registered User Group: Sitewide Moderator Posts: 3,354 Joined: 22-November 01 From: Orland, CA Member No.: 8,453 |
A deduction for a profit sharing contribution CAN create an NOL. However, the deduction is limited in a given year to 25% of compensation. If no earned income or compensation in the "second" year, then the deduction is limited to ........ $0.
However, had the company otherwise posted a loss, along with compensation of $100,000, then a $25,000 contribution could increase the loss. |
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Apr 9 2008, 05:28 PM
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#8
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Registered User Group: Registered Posts: 893 Joined: 17-May 05 Member No.: 14,641 |
Is there anything that prevents simply amending 2006? OP says the accountant missed the deduction, which implies it otherwise was qualified to be taken on the 2006 return.
-------------------- "He attacked everything in life with a mix of extraordinary genius and naive incompetence, and it was often difficult to tell which was which." - Douglas Adams (last updated: 10/12/09)
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