Jump to content
Sign in to follow this  
Flyboyjohn

Deduct 2 years' contributions in 1 tax year?

Recommended Posts

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?

Share this post


Link to post
Share on other sites

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.

  • Like 1

Share this post


Link to post
Share on other sites
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. 

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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. 

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×
×
  • Create New...