What is the amount of non-deductibel contributions for the profit sharing plan as of 12/31/96?

-Profit sharing plan was established on 01/01/94
-Plan provides for a discretionary employer contribution and employee voluntary after-tax contributions.
-Employer has sponsored no other qualified plans.
-Plan satisfied all nondiscriminiation tests since establised.
-NO contributions have been returned to ER.

The Plan has ahd the following compensation and contributions:

Compensation for deduction:
1994 100,000
1995 140,000
1996 160,000

Employer Discretionary Contribution
1994 13,000
1995 25,000
1996 22,500

Employer Voluntary Contributions
1994 5,000
1995 5,000
1996 5,000

Answer is $2,500??????

Plans can carryover the nondeductable contribution from prior years in order to take the deduction in the following year. The employer cannot deduct employee voluntary contributions.

1994 - Limit is 15,000 ER made 13,000 OK
1995 - Limit is 21,000 ER made 25,000 therefore 4,000 is not deductable but can be carried over to 1996
1996 - Limit is 24,000 ER made 22,500 plus 95 carryover of 4,000 equals a total of 26,500 leaving a 2,500 nondeductable contribution for 1996.