Discussion:Excise tax on Excess Contributions-Corporate t/r
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Discussion Forum Index --> Tax Questions --> Excise tax on Excess Contributions-Corporate t/r
Michaelstar (talk|edits) said: | 12 July 2007 |
| I have been unable to locate anyplace where it states that one can not deduct on a corporate t/r the Sec 4979 excise tax imposed on Form 5330 for excess contributions to certain plans. Have I missed something? | |
TheTinCook (talk|edits) said: | 12 July 2007 |
| Reg. 1.164-2(f) prohibits the deduction of Federal excise taxes unless you can deduct it under Sec. 162 as a "ordinary and neccessary" business expense. Sec. 162(f) prohibits deducting "fines and penelties." So you'd have to show that such taxes are ordinary and neccessary expenses, and that they not a penelty. | |
Michaelstar (talk|edits) said: | 13 July 2007 |
| TInCook - thank you for the sites. While these excise taxes are not "penalties" they are in my mind a "sort of penalty" because excess employee 401(k) contributions where not withdrawn by 03/15 and distributed/remitted back to the employees.
There was a break down in communication between the employer and the pension consultant/company and year end testing was not performed in a timely manner causing the excess contributions to not have been distributed timely. Thus a Form 5330 needed to be prepared and filed with excise taxes due. | |
| 13 July 2007 | |
| Agree with TinCook. Also, under Reg ยง1.162-21, Chapter 68 penalties are specifically not deductible (Sections 6651 through 6751). A Sec. 4973 excise tax (Chapter 42) should be deductible since this is not a penalty for violation of the law. | |
Michaelstar (talk|edits) said: | 13 July 2007 |
| Riley2 - I see no real difference between a Sec 4973 excise tax and a Sec 4979 excise tax of which is what my client has had to report and pay. Do you? | |
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