Profit-Sharing Deductibility

[Bruce1]

Is there an issue with an S-Corp claiming the profit-sharing deduction and filing their return but not actually contributing the profit-sharing until after the tax return has been filed? Could this be applied to other areas, such as an individual claiming an IRA deduction for the previous year. Filing their taxes but not contributing the money until after their taxes are filed but before the tax deadline? 

[Peter Gulia]

If all conditions are met, a pension contribution can be deductible “[i]n the taxable year when paid[.]” Internal Revenue Code of 1986 (26 U.S.C.) § 404(a)(1)(A). Accrual is not enough.

“For purposes of [I.R.C. § 404(a)](1), (2), and (3), a taxpayer shall be deemed to have made a payment on the last day of the preceding taxable year if the payment is on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof).” Internal Revenue Code of 1986 (26 U.S.C.) § 404(a)(6).

https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleA-chap1-subchapD-partI-subpartA-sec404.htm.

Consider that a Form 1120-S must be “true, correct, and complete” when the corporation’s officer signs “[u]nder penalties of perjury” the return.