tax technical analysis

Can XCite Biotechnology, Inc. deduct the contributions to the 401(k) profit sharing plan for 2019?

Tax Questions:

How do the limitations on 401(k) contributions impact the deductibility?

· What are the limitations on employee deferrals?

· What are the limitations on employer match?

· What are the limitations on the profit-sharing contributions?

· What are the annual limitations for defined contribution plans and how do they impact the deductibility of the contributions?

· Does the compensation limit for qualified plans impact the deductibility?

· What is the max amount of compensation allowed in a taxable year to defer their salary?

What is the timing of contributions and when do they need to be made?

· When are the employee deferrals or contributions deductible?

· What about the 401(k) offer catch up contributions for some of the older employees? When and how are they deductible?

· What is timing and requirements for deductibility of the 401(k) matching contributions?

· What is “on account of such taxable year” for a contribution deemed made on the last day of the preceding year?

What are the other requirements for defined-contribution plans to be deductible?

· Does XCite meet the requirements of a deductible defined-contribution plan under the IRC?

· Are there any additional limitations on owner-employees (highly compensated executives)?

· If an excess contribution is made, is it subject to any consequences, corrections or penalties?

· Are excess contributions deductible?

· If XCite has an operating loss can they contribute to the “profit sharing” plan?

· What are the so-called nondiscrimination rules of qualified plans and Is the plan discriminatory under 401(k) and 401(m)?

· What impact does failing the discrimination rules have on the deductibility?

· When are the additional corrective contributions deductible?