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profit sharing deduction timing

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Can a deposit made during during one plan year be partially deducted in that year and partially deducted in the following plan year?  (The total amount was within the limits to be deducted in the first year.)

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No.

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The deadline for deposit for deduction is the due date of the tax return, PLUS all valid extensions.  So for 12/31/2018 the deadline would be 9/30/2019; assuming the extension was filed, of course.  An important note would be the date the return is actually filed is not relevant, provided that it is done before the extension lapses.  With this in mind, why would you not deduct the entire amount on the relevant return, since limits were not exceeded?  Also, you can deduct some on the 2018 return with the balance applied to 2019's return. BUT if you do this the limit for 2019's maximum deductible must be determined with this "carry forward"; meaning, the amount available for 2019's contribution is reduced by the amount carried forward.

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1 hour ago, Below Ground said:

The deadline for deposit for deduction is the due date of the tax return, PLUS all valid extensions.  So for 12/31/2018 the deadline would be 9/30/2019; assuming the extension was filed, of course.

Important correction. 

The normal due date of a corporate tax return is 3/15. So 3/15/2019 this year.

The extension is for 6 months of 9/15.  Although I think 9/15/2019 is a weekend but that is the normal date. 

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Read the question. 

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I read the question.  It sounds like they want to deduct a contribution made for a specific year in a following year.  The certainly can, but there are ramifications on what can be used for the future year relative to the maximum deduction of that year.

 

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Not for...... during. 

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Mike, it is my understanding that monies deposited during a specific year must be used for the allocation of either that year or a prior year.  In other words, you can't "carry forward" a deposit for a future year allocation.  However, I am unaware of any prohibition on carrying a deduction forward to a future year, regardless of the year of allocation.  Otherwise, if a company mistakenly omitted a deposit in the deduction for the year of a specific allocation, are you saying they can never deduct that deposit unless they file an amended return?  To be clear, I am not saying unused deduction as was done in olden times when the profit sharing deduction was 15%, can be carried forward.  I am saying an undeducted deposit that should have been applied in 2018 can be deducted for the 2019 or later year.

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1 hour ago, Below Ground said:

 Otherwise, if a company mistakenly omitted a deposit in the deduction for the year of a specific allocation, are you saying they can never deduct that deposit unless they file an amended return? 

Absolutely! 

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So be it. 

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Looks like this has already been settled, but thought I'd chime in with some code references.

404(a) says, in more verbose form, that contributions to a plan are not deductible unless they meet the requirements of that section.

404(a)(3)(A)(i) allows the deduction for contributions paid into a profit sharing trust in the taxable year when paid (with (a)(6) providing the deemed timing rule for contributions paid by the due date of the tax return). 404(a)(3)(A)(ii) allows for the carryover of the deduction to following tax years of amounts which were contributed in excess of the 25% limit. I am aware of nothing in the code or regs that would allow the employer to arbitrarily decide to take a deduction in some future year for a contribution paid in the current year.

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22 minutes ago, C. B. Zeller said:

Looks like this has already been settled, but thought I'd chime in with some code references.

404(a) says, in more verbose form, that contributions to a plan are not deductible unless they meet the requirements of that section.

404(a)(3)(A)(i) allows the deduction for contributions paid into a profit sharing trust in the taxable year when paid (with (a)(6) providing the deemed timing rule for contributions paid by the due date of the tax return). 404(a)(3)(A)(ii) allows for the carryover of the deduction to following tax years of amounts which were contributed in excess of the 25% limit. I am aware of nothing in the code or regs that would allow the employer to arbitrarily decide to take a deduction in some future year for a contribution paid in the current year.

BG? 

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On 8/8/2019 at 12:44 PM, Below Ground said:

However, I am unaware of any prohibition on carrying a deduction forward to a future year, regardless of the year of allocation. 

Can you point to anything that supports the deduction of a current contribution in a future year, other than a contribution in excess of the 25% limit?

 

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I knew about the "over 25% limit allowance", since I have had experience with that particular problem; which was prompting my position.  Specifically, we had one client that HAD a practice of depositing during the year more than the 25% limit.  Luckily, that client would listen (eventually) to guidance provided, so we were able to get that practice to stop.  Thinking back I do recall that there are aspects of our argument that support Mr. Preston's position, which was how we got that client to stop the "excess advance funding".  Since that time I had an argument with an accountant who insisted that you could carry forward the deduction regardless of the 25% limit, who at that time convinced me that you could.  I will need to review notes from those conversations.  Unfortunately, I do not have the necessary time, and am unsure exactly were those notes are; otherwise I would refer to them now.  Until that time I concede the argument, since I have no cite to support my position.  Conversely, Mr. Zeller has provided a cite, which clearly indicate that I am wrong in my position.  Unless I provide a contrary cite I suggest that matter is fully resolved, and I accept that I am in error.  (If I can I will be sure to provide a supporting cite.  Unfortunately, in hind site, after review of what I do have, I am pretty sure it does not exist.)  Hopefully Mr. Preston will be satisfied with this mea culpa.

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43 minutes ago, BG5150 said:

Me?

No. 

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1 hour ago, Below Ground said:

Hopefully Mr. Preston will be satisfied with this mea culpa.

More than. Thx for taking the time to close the loop. 

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