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SEP Years of Service for Spouse

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This question is about a couple who operate a farm. The husband has been reporting as a self-employed farmer for several years with an established SEP plan. Four years ago, the couple elected to treat the business as a qualified joint venture, reporting the revenue and income on two Schedule F's, one for each spouse. Prior to the election, everything was reported in the husband's name.

The farm has reported a loss for the past three years, but this year it has a profit. The husband and wife would both like to make a contribution to their SEP plan (as well as for other qualifying employees). However, the wife has only reported the farm on a separate Schedule F in her name for four years, and the farm had a loss for three of those years.

The question is whether the wife meets the eligibility requirements for a SEP contribution since she did not have positive earnings from the business for three of the last five years. Does a year with a loss count as a year of service for an owner for eligibility purposes?

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