The compensation paid by Purple Corporation to the plan participants of a profit sharing plan in 2017 was $38,300. During 2017, Purple Corporation contributed $10,000 to the plan. Purple's deductible amount for 2017 is what amount, if any?

Question

Quizplus · Accepted Answer

The deductible amount is the lesser of 15% of compensation or the amount contributed to the plan. 15% of compensation is $38,300 x 15% = $5,745. The amount contributed to the plan is $10,000. Therefore, the deductible amount is $5,745.

The Compensation Paid by Purple Corporation to the Plan Participants