Buyout of PA Owner Mid-Year: Who Gets Deduction Credit

[Guest DuChamp]

There is a three owner Professional Association. Two of the owners bought out the third member mid-year (June). The PA will file two short taxable years. One from January through June. The other July through December.

The PA has a Calendar Year 3% Non-elective Safe Harbor with a discretionary profit sharing piece. How do these two entities allocate the deduction for employer contributions? Is it allocated as of the end of the plan year and thus only to the second taxable year? Is it pro-rated? Are the Safe Harbor and Discretionary contributions treated differently?

Thanks!

[K2retire]

What does their buy out agreement say?

[Guest DuChamp]

What does their buy out agreement say?

The buy out agreement is silent on the issue.

[mbozek]

What does the PAs accountant think should be done?

[Guest DuChamp]

What does the PAs accountant think should be done?

The PA are accountants.