Ques on Schedule I

[Guest noans]

Easy Schedule I and I'm baffled. I have a client that has carried a receivable on the books for a couple of years. It's been included in the assets for Schedule I. This client went into Chapter 7 bankruptcy and will never make this contribution. The plan closed and all assets distributed. I need to file a final 5500. For 2010, one participant, the owner, had assets and he was distributed. However, once I put his distribution and earnings on the 2010 Schedule I, I still have that receivable contribution to contend with. I won't balance until I do something with that money. I have no clue where to put this on the Schedule I in order to have no assets. It's one thing to write it off on the books...but where the heck does that go on the Schedule I?? Any clues?? Thank you!!

[Jim Chad]

FWIW I think it would get lost in gains and losses or maybe it is called other income.

[Guest noans]

You know...I thought about that Jim, just putting it in as a loss. I'm preparing this 5500 "after the fact". The last participant was distributed with his earnings. I'm thinking it's going to be my only recourse. Wondering if I should list it as a reversion of assets to the client since they never deposited it? thoughts on that? thanks!

[Guest Marge]

Another idea (although I've never tried it before) is to show the unpaid receivable as a Liability in the Plan Assets and Liabilities section. The balance on the Schedule I will indicate that there is still a balance, but essentially this is the case in that the amount was never received. I tried it and the Sch I validates clean, even though I checked that it was a Final return with an ending participant count of zero. Another option would be to show it as a negative contribution in the Income/Expenses section. The only problem I see with subtracting it from the earnings would be that the DOL will not see that the receivable was not paid. My thoughts would be to show this amount clearly in some field on the Form 5500 filing so that it is clear that the assets did not zero out smoothly.

After you establish the field to report the unpaid amount, then, perhaps publish the 5500 to your web-client using your own e-mail address so that an e-mail is not yet generated to your client. Log into your webclient and double-check that the 5500 validates cleanly. If all is OK, re-publish the plan using your client's e-mail address.

[Guest noans]

good point Marge. I'll try the liability step. thank you

[Bird]

It seems the most accurate solution is to amend returns going to the one where the contribution was shown. If that's impractical (and I don't know that that's a valid reason not to) then I'd bury it in the gain/loss. I'd think you'd get kickback from the EFAST2 people if you carried a liability on the final return, if not at the time of filing at some later date.