I have a client that is a single member LLC. For tax purposes he files a schedule C. He also files a schedule F for a farm he owns. His farm income offsets all income earned through the sch C so total income is zero. My question is, can he still take a deduction on the sch C for profit sharing contributions or does the loss from the sch F eliminate this deduction?

FWIW, someone in my firm once researched the use of Sch F income and came to the conclusion is was not available to be used for qualified plan purposes. I would assume the same is true in reverse in that it does not offset Sch C income for qualified plan purposes. Of course this is all heresay and the information may not be worth a turd in the lawn, but there you have it.

Blinky,
I'm far from an expert on this subject, but I'm aware of many self-employed farmers using Schedule F income as compensation for qualified plans. Does that individual at your firm still have the research? Any specific justification for the opinion? Any one else have a comment on this subject. CPA's Tax Attorney's in the House??? :