Farmer John the Sole Proprietor

[Guest Donkey Kong]

If a sole proprietor is a farmer and reports income on Schedule F to his personal tax return, how is this counted for purposes of income for a qualified plan? I have only dealt with using income reported on Schedule C in the past.

However, I imagine it would be a similar situation in that you would take the gross income from the Schedule F and back out 1/2 of the self-employment taxes and the contribution to determine net earned income.

Anyone have experience with this?

[Guest LTurner]

without researching this, I would tend to agree with you. I'm only replying to add this thought to farmer John.

If married, why not pay the wife commodity wages... (i.e. 10 head of beef, a semi-load of corn, etc.) Then she's considered an employee and could also benefit in the plan.

[GBurns]

Would not the taxes due on these wages offset the benefits from the plan?

She would owe taxes, he would owe employer matching FICA and they would have increased AGI on their joint return.