4th quarter distribution - S-Corp

Here's the situation:

S-Corp pays quarterly distributions. Some of the distribution amount goes directly to shareholders, some of the distribution goes into shareholders' SEP-IRA accounts.

The 1st through 3rd quarter distributions don't seem to be a problem as getting the check to the financial institution happens during the calendar year.

For the 4th quarter, exact amount of distribution won't be known until Dec. 31 -- making it impossible to get the checks to the financial institution in calendar year 2005.

Will the checks, received by the financial institution in early 2006, still count as 2005 SEP-IRA contributions (they will be generated on

12/31/05) even though the FI does not make the deposit until 2006?

An alternative -- cutting checks to the FI early and then balancing against the distribution amount on 12/31 -- may be necessary. What type of journal entries would be needed for such a set of transactions? Normally, the distributions are generated as "stockholder payable".

Thanks in advance to all who respond with ideas and help.

Reply to
pjhartman
Loading thread data ...

Does not matter when the checks get cashed by the financial institution. As long as the checks where issued at years end they are considered distributions for that year.

Yes, contributions can be made up until the date of the final extension to file their returns.

Reply to
Allan Martin

It should be noted that I find it strange that payments to the shareholders' SEP-IRA accounts are treated as distributions. I will assume just poor wording on your part.

Reply to
Allan Martin

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.