Technical topics regarding tax preparation.
16-Sep-2021 10:54pm
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I have a sole proprietor client (Schedule C ) who has established a defined benefit plan . He currently pays the annual third party administrator fees from the Schedule C business . Can he take a deduction on Schedule C for the payment or should the Defined Benefit Plan be paying the fee in which case that would lower the balance in the DBP .
17-Sep-2021 9:54am
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Yes, he can. Is there some doubt on that which I am overlooking?
17-Sep-2021 3:01pm
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Only that the nature of the expense stems originates from the defined benefit plan and not the activity of the Schedule C .If this is deductible on Schedule C what expense category should it be reported on ?
17-Sep-2021 3:42pm
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The benefit plan would benefit all employees and the owner. Just because there may not be any other employees doesn't change the nature of the deduction. It's a business level retirement plan either way.
~Captcook
17-Sep-2021 7:06pm
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Legal and Professional Fees.
17-Sep-2021 8:14pm
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It goes w/o saying, but I'll say it, that the economics change (favorably) by employer's paying the fees and deducting them, while the plan balance compounds annually on a tax-deferred basis.
18-Sep-2021 7:52pm
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Some of the expenses may also qualify for the credit for Small Employer Pension Plan start-up costs.
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