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Subject:  Re: Scorp and Sep Date:  1/25/2001  11:43 AM
Author:  BostonCPA Number:  44806 of 130716

I have an SCorp where I am the sole employee. I have set up a SEP. Since I hold 100% of the stock how do I account for the SEP contributions. Do they go on the SEP return or do they get added to my W2 and go on my return?

FYI. I have asked two CPA's and gotten two different answers.

The SEP contributions are deducted on page 1 of the corporate tax return (Form 1120S, line 17). To the extent that the contributions are deducted by the corporation, the are NOT includable in the employee's gross income (i.e. they are not added to your W-2). The advantage of the SEP is that you have up until the due date of the corporate return (including extensions) to fund the SEP.

Internal Revenue Code Section 408(k) covers SEPs.

Good luck.

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