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VeryOldMan

Pension Deductions: Sec 412 vs 404(a)(6)

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I have a pension plan with a $300,000 minimum funding requirement for 2018. Plan and fiscal year are the calendar year. The client funded $125,000 in Jan 2019 and filed his corporate return without extension. The balance of $175,000 was funded in May. The issue is whether the $175,000 is deductible for 2019 fiscal year.

Rev Ruling 77-82 says... " the rules of this section relating to the time a contribution is made for sec 412 are independent from the rules contained in sec 404(a)(6)".

2011 Gray Book Q&A 7 raised the issue of which combinations are acceptable for a contribution made during the 2010 404 grace period ( 1/1/11 to 9/15/11) as follows:

a) Deduct in 2010 reflect on 2010 Sch SB

b) Deduct in 2010 reflect on 2011 sch SB

c) Deduct in 2011 reflect on 2010 sch SB

d) Deduct in 2011 reflect on 2011 sch SB.

The acceptable answers were a, c and d.

Based on this, I've concluded that I will report on $175,000 on the 2018 such SB and take the deduction in 2019. Any comments? Many thanks...

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Verification: If you are taking the deduction in 2018, are you amending the 2018 tax return?

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13 minutes ago, david rigby said:

Verification: If you are taking the deduction in 2018, are you amending the 2018 tax return?

He isn't so he isn't. He's OK as long as the deductible limit in 2019 is sufficiently high. 

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No, we took the $125,000 deduction in 2018 and the balance of $175,000 in 2019. There is no issue with the $125,000 since it was paid in time to deduct on the 2018 corp return. My issue was with the $175,000 that was paid after 2018 tax return was due (4/15)  and is being deducted in 2019, and reported with the 2018 Sch SB.  This is answer (c) from above, and I believe that interpretation supports the 2019 tax treatment. Just looking for confirmation. There will be a large potential deduction for 2019, so as Mike says that will cover the $175,000 plus additional contribution from 2019 valuation.

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2 hours ago, VeryOldMan said:

 Just looking for confirmation. 

Confirmed. 

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