Rev. Rul. 56-674

Advice has been requested whether a deduction will be allowed for the payment of the first year's contribution to an employees' qualified pension trust, made after the close of the time allowed for filing a corporate income tax return, but within the period for which an extension of time could have been obtained for filing the return.

The M corporation files its income tax returns on a fiscal year basis ending March 31, under the accrual method of accounting. On March 25, 1955, a pension plan and trust agreement were executed and a token payment of $200 made to the trust. The plan and trust have been held to meet the requirements of section 401(a) of the Internal Revenue Code of 1954 and the trust to be exempt from tax under section 501(a) of the Code.

The contribution required for the first year of the plan was not made on or before June 15, 1955. However, the payment was made within the following three month period for which an automatic extension of time could have been obtained for filing the return.

Section 404(a)(6) of the Code provides, that for the purposes of timely payments under qualified pension, stock bonus, profit-sharing, or annuity plans, a taxpayer on the accrual method of accounting shall be deemed to have made a payment on the last day of the year of accrual if the payment is on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof).

Section 6072(b) of the Code provides that income tax returns of corporations made on the basis of a fiscal year shall be filed on or before the 15th day of the third month following the close of the fiscal year.

Subsection (a) of section 6081 of the Code provides, in part, that the Secretary or his delegate may grant a reasonable extension of time for filing any required return. Subsection (b) of such section provides for an automatic extension of three months for the filing of the corporate income tax return, if the corporation files a prescribed form and pays the amount properly estimated as its tax or the first installment thereof. Form 7004, Application for Automatic Extension of Time to File U.S. Corporation Income Tax Return (Sec. 6081(b), Internal Revenue Code of 1954), is prescribed for this purpose.

The law is specific as to the requirements to be met if an automatic extension of three months is to be obtained. The Form 7004 must be filed on or before the 15th day of the third month following the close of the taxable year, together with a remittance of an amount not less than would be required as the first installment, should the taxpayer elect to pay the tax in installments as provided by law. These requirements, in the instant case, were not met on or before June 15, 1955. Consequently, the automatic extension provided by section 6081(b) of the Code is not applicable. To hold that section 6081(b) of the Code is applicable as a `matter of right' would make meaningless the provisions of section 6072(b) of the Code which requires the filing of a return on or before a specific day.

Accordingly, it is held that a contribution, under an employees' qualified pension, stock bonus, profit-sharing, or annuity plan, made after the 15th day of the third month following the close of the fiscal year of a corporation on the accrual method of accounting, will not be allowed as a deduction under section 404(a)(1), (2), or (3) of the Code for such fiscal year where no extension of time for filing a corporate income tax return was obtained under section 6081(b) of the Code and none was granted under section 6081(a) of the Code, since such contribution is not made within `the time prescribed by law for filing the return' under section 404(a)(6) of the Code.