Profit Sharing Contribution

[Guest Julie Woulfe]

In early 2011, the client contributed to the Plan a $15,000 Safe Harbor contribution for 2010. The client took a $15,000 deduction on the 2010 Subchapter S tax return, which was filed by the 3/15/11 due date. In our contribution calculations for the 2010 plan year, we also calculated a 2010 profit sharing contribution of $11,000 (based on 2010 employees' compensation amounts). The client then made the 2010 profit sharing contribution of $11,000 on 4/4/11. The client understands he cannot deduct this $11,000 on the 2010 tax return, since it was already filed. However, I would like to confirm that the client can deduct the $11,000 on the 2011 tax return, as long as the total contribution deduction for 2011 does not exceed 25% of 2011 compensation.

[Jim Norman]

Yes, it is a 2011 deduction.