Belgarath Posted May 8, 2019 Posted May 8, 2019 Just wondering how some of the practical aspects will play out with recordkeeping platforms, reporting, etc. For example, the SCP loan default correction. This is great, but suppose a loan defaults in year one. Deemed distribution is reported. 2 years later, as allowed under the Rev. Proc., you "correct" this so that there is no taxation. Are you allowed to amend your previously filed income tax returns? How far back can you go to amend a personal return? What documentation is required to do so, etc...?
MoJo Posted May 8, 2019 Posted May 8, 2019 I maybe reading the Rev Proc. differently - if I understand what you are asking. If you "deem" the loan, it is already "corrected" at that time, so going back two years later to correct it a different way is not what I believe the IRS is allowing here. I don't believe you can't "uncorrect" a previously corrected (deemed) loan, and then recorrect it another way, undoing the previous correction tax consequences.....
justanotheradmin Posted May 8, 2019 Posted May 8, 2019 I agree with MoJo. I'm a stranger on the internet. Nothing I write is tax or legal advice. I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?
Luke Bailey Posted May 8, 2019 Posted May 8, 2019 I agree with justanotheradmin's agreement with MoJo. Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034
Mike Preston Posted May 9, 2019 Posted May 9, 2019 8 hours ago, MoJo said: I maybe reading the Rev Proc. differently - if I understand what you are asking. If you "deem" the loan, it is already "corrected" at that time, so going back two years later to correct it a different way is not what I believe the IRS is allowing here. I don't believe you can't "uncorrect" a previously corrected (deemed) loan, and then recorrect it another way, undoing the previous correction tax consequences..... "can"? Oh, boy! Disagreeing with three folks at once!
MoJo Posted May 9, 2019 Posted May 9, 2019 10 hours ago, Mike Preston said: "can"? Oh, boy! Disagreeing with three folks at once! Sometime my fingers type all by themselves..... "I don't believe you 'can' uncorrect a previously corrected problem..." "You can't!" (IMHO)
Belgarath Posted May 9, 2019 Author Posted May 9, 2019 You may be right, and I may be dead wrong, but something seems bizarre if one follows what appears to be your interpretation. So IF you "follow the rules" there is a taxable distribution almost immediately. (End of cure period, deemed distribution.) On the other hand, if you fail to follow the rules, either intentionally (but of course it would never be officially intentional) or through error, you can correct under SCP, in theory depending upon time of default, up to 4+ years later, with NO DEEMED DISTRIBUTION AT ALL. I find it hard to believe that this is what the IRS intended, even granting that they say they reserve the right to limit the use of this correction to "appropriate" situations. Whatcha think? Am I off my rocker on this?
MoJo Posted May 9, 2019 Posted May 9, 2019 4 minutes ago, Belgarath said: Whatcha think? Am I off my rocker on this? No. You aren't off your rocker. But keep in mind there are other requirements of SCP that still must be adhered to. You must document 1) what happened and what the "failure" was (and I would suggest never hinting at it being intentional); 2) what the correction was; and 3) WHAT STEPS HAVE/WILL BE TAKEN TO ENSURE NO REPEAT FAILURES. Um, IMHO, it would be difficult to do what you suggest - at least more than once - if you want your SCP to be taken seriously....
RatherBeGolfing Posted May 9, 2019 Posted May 9, 2019 4 minutes ago, Belgarath said: Whatcha think? Am I off my rocker on this? Nope. I think you are dead on, but I don't think there is anywhere in 2019-19 (that I have seen) that allows for "correcting a correction" under SCP. It may be one of those cases where the RKs have to catch up and ask clients whether they want to deem at the end of the cure period or do nothing and wait for the PA to pick the correction method. There will also be plenty of conversations with IRS (and DOL) on this that will probably help flesh out the details.
thepensionmaven Posted May 10, 2019 Posted May 10, 2019 Does anyone have a copy of the RevProc wherein the Table of Contents contains actual page numbers rather "P ." for the page numbers?
Belgarath Posted May 10, 2019 Author Posted May 10, 2019 No, and it is a constant annoyance to me! I second this question - if available somewhere, it would be wonderful!!!
RatherBeGolfing Posted May 10, 2019 Posted May 10, 2019 27 minutes ago, Belgarath said: No, and it is a constant annoyance to me! I second this question - if available somewhere, it would be wonderful!!! I havent seen one yet. I'm making a clickable TOC with a link to each section/item, but I have family in town so probably wont finish it until next week. I'll share it here when its done. It will retain all the original pages with an added custom TOC in front
thepensionmaven Posted May 11, 2019 Posted May 11, 2019 I would hope you have staff to do. Can I get a copy?
RatherBeGolfing Posted May 11, 2019 Posted May 11, 2019 2 hours ago, thepensionmaven said: I would hope you have staff to do. Can I get a copy? I'll share it here for anyone who wants a copy. I actually prefer to do things like that myself because I'm a little particular when it comes to notes and reference material...
EBECatty Posted May 13, 2019 Posted May 13, 2019 You can also find versions with page numbers in the actual Internal Revenue Bulletin where the Rev. Procs. are published. Not sure it's been published yet for 2019-19, but here's the prior version of EPCRS in Rev. Proc. 2018-52 (found in Internal Revenue Bulletin 2018-42) starting on page 611 of the IRB, page 15 of the pdf: https://www.irs.gov/pub/irs-irbs/irb18-42.pdf
BG5150 Posted May 13, 2019 Posted May 13, 2019 On 5/10/2019 at 8:10 AM, Belgarath said: No, and it is a constant annoyance to me! I second this question - if available somewhere, it would be wonderful!!! Do you have an intern? have them do it! PS: I do NOT have an intern. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
MoJo Posted May 13, 2019 Posted May 13, 2019 25 minutes ago, BG5150 said: Do you have an intern? have them do it! PS: I do NOT have an intern. "Intern"? "Staff"? What are these things you all speak of?
RatherBeGolfing Posted May 13, 2019 Posted May 13, 2019 rp-19-19 New.pdf This copy should have retained the original formatting but with added page numbers in the TOC. You should also be able to click the line in the TOC and have it take you to the page in question. I'll probably make a re-formatted one with less pages and TOC that goes down 5 levels (Part 1 / Section 1 / .01 / (1) / (a)) but I'm not sure when I'll have time to do it. duckthing and justanotheradmin 2
thepensionmaven Posted May 13, 2019 Posted May 13, 2019 https://www.irs.gov/pub/irs-irbs/irb19-19.pdf, page 1086
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now