Deduction Timing

[JBones]

A calendar year client puts their 2009 corporate return on extension, files it on 4/12/2010 with a $0 pension deduction. Later it is determined that a minimum contribution is due. Client makes the contribution by the 9/15/2010 but does not amend their corporate return.

Is the contribution allowed to be carried over to the next year? I know that it would be if they had not put the return on extension, but wanted to confirm if the extension would cause any problems.

[Mike Preston]

1) What you say you know is not true. Under post-PPA rules, there are no "carryovers" as you describe. Unless or until the IRS issues regulations similar in concept to what applied in the pre-PPA period the old "carryover" rule (which is technically referred to as the "includible contribution" rule) doesn't really apply.

2) If a contribution is made in 2009 and deducted on the 2009 return, it is subject to the 404 rules for 2009. The fact that the contribution is also credited to 2008 for 430 purposes seems to be somewhat irrelevant under post-PPA rules. Normally, this is not a problem, since the deductible amounts are typically quite high under poss-PPA rules.

[AndyH]

Mike, have you discussed your first point with anybody from the IRS, or heard any such discussion? I understand your point but this seems like an error of omission pending regulations (or corrective law) rather than something that was intentionally changed.

(And of course in the past they tried not to issue regulations without supporting law but now that does not seem like a barrier)

[Mike Preston]

As I've mentioned in another thread today, the IRS seems to be avoiding all questions related to 404 because there are no regulations, post-PPA. Yes, the includible contribution issue has been brought up. Nobody will say, even off the record, that it is likely the same rules will apply post-PPA. Amazing, at this point.