Self-Employment - Earned Income for Pension plan

[flosfur]

My understanding is that a self-employed person's earned income for pension plan purposes is the income on which Self-Employment tax is paid/payable - income shown on Sch SE of Form 1040?

An individual has Sch C earnings of $X and royalties (from inventions) of $Y but only pays SE tax on $X. Can the royalties be considered as his earned income for pension plan purposes and deduct DB cost against that income?

Having a problem with a takeover case where the client has, in the past, contributed and deducted far more than the Sch C earnings of $X.

(Why royalties from inventions are not subject to SE tax is a question for another day).

[J Simmons]

Check out Rev Rul 68-129, 1968-1 CB 389, and Kramer v. Commissioner, 80 TC 768 (1983).

Gains and net earnings from the sale or licensing of property created by the personal efforts of the self-employed author or inventor is earned income. But payment from the transfer of a patent (a capital asset) are not.