Schedule F filer and DB contribution

[Guest Rae]

I'm preparing a valuation for a one-man DB plan, where the participant files Schedule F (regarding profit/loss from farming). My understanding is that the income is calculated the same way as for Schedule C, with the circular calculation to reduce income by the contribution and 1/2 of the SE tax.

If the contribution is greater than the Schedule F income, does this work the same way as well--i.e. there is a carryforward of the non-deductible amount to be deducted (hopefully) in future years as allowed?

[JAY21]

Given you've received no better response, I'll throw in an opinion that it seems likely the Schedule F would work like the Schedule C on the deduction issues as any non-incorporated entity is not allowed to deduct more than their net business income as it would otherwise reduce or wipe out other non-business type of income (e.g., income from personal passive investments). I can't say I'm familiar with the Schedule F, so this isn't a high knowledge opinion but it would seem consistent with the general framework of non-corporations being limited in their tax deductions, and therefore with some potential carry-forward deductions if greater than the net income.

[Guest Rae]

Thanks for replying. I asked around my office, and the opinion was the same as yours. I had thought this was the position all along, and we are proceeding on this basis.