How does the settlement initiative apply to a partnership or S corporation?
A.11 The settlement terms that apply to a partnership or S Corporation are similar to those that apply to a self-employed individual. Thus, the amounts disallowed with respect to the plan for the open years result in an increase in the taxable income of the partners of the partnership or shareholders in the S corporation in the manner any disallowance would normally be allocated under an examination. With respect to the contracts distributed to partners or shareholders, the amounts included in income are the sum of the premiums paid reduced by the amounts added to taxable income with respect to the contracts in the earlier taxable years. Q.12 Is the settlement initiative available if no Form 5500 was filed with respect to a plan (for example because only the owner participated in the plan and the insurance contracts were valued at less than $100,000)? A.12 Yes. The mere fact that the Form 5500 was not filed with respect to the plan will not prevent a taxpayer from participating in the
