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One negative Schedule C... possibly outweighed by the owner's other compensation?

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This might actually be a more general question, but since the plan I'm working on is looking to allocate just a safe harbor, I figured it went here...

A doctor owns 100% of three businesses: Sole Prop A, Sole Prop B, and S-corp C.  They are all part of the plan.  For the first time, I've got an issue with the compensation.  Sole Prop A has a net Schedule C (before pension expense) of $34K.  Sole Prop B has a net loss (before pension expense) of -$127K.  And the S-corp paid him a W-2 of $278K, including $18K of 2% shareholder health insurance premium.

Normally, all the numbers are positive and combine to be way over the compensation limit (even after the safe harbor expense for the participants), so this is nothing to worry about.  But 2020 was, well, 2020.  I'm sure it isn't as simple as combining the three numbers.  I thought I remembered hearing that you combine the self-employed amounts, and if that is less than zero, you can treat that as zero... but I can't find that in writing at the moment, so I'm reluctant to go with that until I've got something to hang my hat on.

Any thoughts or directions to point me in?  Thanks.

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Looks like you have $185K of income (278 + 34 - 127).

I think if you didn't have the S-corp you could treat his loss as $0 for plan purposes but since all 3 are adopting members of the plan and a controlled group I believe you need to aggregate his W-2 wages with his SE loss.

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I thought this came up earlier this year, or maybe last fall, it's all a COVID blend right now, but I referenced an ASPPA recorded webcast that Derrin Watson did on earned income and he covered this. If I remember, he stated there was no clear guidance either way but thought you it would be reasonable to combine the SE income to not less than zero and then add in W-2.

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