The Section 4973 Shield: Auditing Form 5329 Part IV to Neutralize Excess Contributions скачать в хорошем качестве

The Section 4973 Shield: Auditing Form 5329 Part IV to Neutralize Excess Contributions

We are performing a forensic deconstruction of the Roth IRA Excess Contribution crisis—a systemic compliance failure governed by the compounding penalty framework of IRC § 4973. Unlike one-time penalties, the 6% excise tax is a "Rolling Liability" that re-attaches to your ledger every December 31st until a formal correction is executed. As The Finance Observer, I analyze the mechanical "Shield" of the five correction protocols, from the Section 408(d)(4) Undo Button to the strategic use of the Absorption Method. We break down the Net Income Attributable (NIA) formula mandated by Treasury Reg. 1.408-11, revealing why the performance of your entire account dictates the cost of your mistake. We audit the Paschall v. Commissioner precedent, which established Form 5329 as a separate tax return, effectively keeping the statute of limitations open indefinitely for those who fail to report. Finally, we deconstruct the "Price of Admission" strategy, where paying the 6% tax becomes a deliberate move to lock in massive, tax-free gains. FORENSIC BREAKDOWN: [00:11] Forensic Analysis of Form 5329: Mapping the compliance threads for prior-year excess contributions. [00:52] The 6% Excise Tax: Deconstructing the recurring penalty framework of IRC § 4973. [01:29] Rolling Liability: Why uncorrected errors snowball into permanent annual tax hits. [02:33] The Root Causes: Auditing the "Big Three" triggers—annual limits, MAGI phase-outs, and botched rollovers. [03:44] The 5 Correction Methods: Analyzing the toolkit from timely distributions to absorption. [04:21] Timely Correction (IRC § 408(d)(4)): The "Undo Button" and the strict filing deadline protocol. [05:09] Form 5329 Part IV Walkthrough: Auditing the "Official Ledger" from Lines 18 to 25. [06:00] The FMV Cap: Applying the fairness rule to limit penalties on depreciated accounts. [06:39] NIA Calculation: Mechanical walkthrough of the Treasury Reg. 1.408-11 mandatory formula. [08:15] Paschall v. Commissioner: Why failing to file Form 5329 leaves the audit window open indefinitely. [08:43] Strategic Pivot: Determining when paying the 6% penalty is the price of admission for massive tax-free gains. THE LAW (Citations): IRC § 4973: Excise Tax on Excess Contributions to Individual Retirement Accounts. IRC § 408A: Roth IRA contribution and phase-out mandates. IRC § 408(d)(4): Distribution of excess contributions before due date of return. Treasury Reg. 1.408-11: Net income attributable to IRA distributions. Paschall v. Commissioner: Ruling on Form 5329 as a separate tax return. DISCLAIMER: I am The Finance Observer. This content is for educational purposes only. I am not a CPA, Attorney, or Enrolled Agent. This video breaks down Federal Tax Law and Tax Court precedents for informational purposes. Roth IRA corrections involve complex reporting and statute of limitations rules. Always consult a qualified tax professional before filing Form 5329 or executing corrective distributions.