Flyboyjohn Posted February 16, 2019 Share Posted February 16, 2019 Taxpayer needed large 2017 tax deduction and was advised to adopt a DB plan in November 2017 with a November 30 plan year end. Taxpayer funded PYE 11/30/17 in November 2017, funded PYE 11/30/18 in early December 2017 and claimed deduction for both contributions on 2017 calendar year tax return. Sounds fishy to me, is this allowable? Link to comment Share on other sites More sharing options...
Mike Preston Posted February 17, 2019 Share Posted February 17, 2019 No. Link to comment Share on other sites More sharing options...
C. B. Zeller Posted February 18, 2019 Share Posted February 18, 2019 If the initial plan year were a short plan year from 1/1/17 - 11/30/17 then I think the rule under 1.404(a)-14(c)(1) would allow both deductions to be taken for calendar tax year 2017. I agree it's fishy though. You can get a plenty big deduction from a well-designed plan without resorting to these kinds of tricks. ugueth 1 Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co Link to comment Share on other sites More sharing options...
Mike Preston Posted February 18, 2019 Share Posted February 18, 2019 3 hours ago, C. B. Zeller said: If the initial plan year were a short plan year from 1/1/17 - 11/30/17 then I think the rule under 1.404(a)-14(c)(1) would allow both deductions to be taken for calendar tax year 2017. Only if the participants in question are not receiving anywhere close to the 415 limit. Which is usually not the case. Link to comment Share on other sites More sharing options...
ak2ary Posted February 25, 2019 Share Posted February 25, 2019 Seems to me that these kind of schemes show up now and again and rarely if ever work...and even if they do work, you wind up spending more than the tax savings defending yourself. My clients don't like audits, don't like appeals and don't like tax court. Link to comment Share on other sites More sharing options...
Mike Preston Posted February 25, 2019 Share Posted February 25, 2019 Yeah, I'd love to see the ASOP 51 disclosure on one of these. $ to donuts they are taking the position that the deductible amount is the purview of somebody else. Nasty surprise awaits the client. Link to comment Share on other sites More sharing options...
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