S-corp SEP plan deduction

[OldJack]

Fringe Benefits for a >2% S-corp shareholder are treated as if he was a partner in a partnership. What is the procedure for deducting a >2% shareholders SEP-IRA contribution.

1). Does the S-corp deduct the >2% shareholders contribution on 1120S, page 1, line 17 (Pension, Profit Sharing, etc.,Plans), or is it added to the shareholders W2 gross and deducted on 1120S, page 1, line 7 or 8 (Wages)?

2). Does the S-corp >2% shareholder have the contribution added to W2 gross and then take the deduction on 1040, page 1, line 28 (SEP deduction), as would if he was a partner in a partnership or self-employed?

[Matt Sova]

1120S and SEP

I have always taken the owners SEP contribution on the 1120S.

[Brad Imsdahl]

The more than 2% S corp shareholder taxable fringe benefit rule does not apply to all fringe benefits. TTB, page 13-27 lists the seven that do apply. Retirement plan contributions is not included in the list and is therefore treated the same as for any other employee.

[ChEAr$]

Hold the phone

For a corporate SEPIRA, like mine of course, my corporation contributes 25% of
my salary and takes that deduction only on page one.

Only if I separately quality to contribute to the IRA may I do so (I can't btw), and
that is not shown on the corporate return.