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Sub- S "bonus" used for contribution


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I believe K-1 income for an owner of an S- Corp can not be used as active income in determining the contribution for the owner. Pension Answer Book as well as RR 59-221 seems to bear this out.

Recently, I was told that as long as the K-1 represents compensation for services rendered to the coproration, it is ok to use the K-1 for pension contribution.

Isn't this in direct conflict with the Revenue Ruling and Penson Answer Book??

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