Maximum deductible contribution for the DB plan

[amoy]

The client has a defined benefit plan and is a S-Corp. So the calculated maximum deductible contribution is $300,000, the minimum required contribution is $100,000, and the net profit for 2014 is $200,000. So he made $300,000 into the plan and claimed a $100,000 in loss.

Is it allowed as a S-Corp to make the contribution more than the net profit?

[Mike Preston]

Check with the accountant. As I understand it the final $100,000 would be deductible to the extent there is basis.

[shERPA]

Yes the S-corp can make a contribution in excess of the profit. Yes, this creates a loss that passes thru to the shareholder(s). This loss can reduce the shareholders taxable income from other sources, but is limited to their basis in their stock of the corporation. If the loss is greater than the basis, the loss is deducted to the extent of the basis and the rest of loss is carried forward and can offset future taxable profit from the S corp.