Controlled group with 3 partnerships, one has a loss. How to calculate compensation

The controlled group is made up of 3 partnerships.  One of the partnerships reports K1 loss.  Is the combined compensation of the other 2 entities reduced by the loss or is that entity ignored?   

A plan might have several distinct definitions of compensation measured for different purposes.

Are you asking about:
benefit-accrual compensation?
nondiscrimination-testing compensation?
annual-additions-limit compensation?

Among some of many questions one might need to answer to develop relevant facts:

Which of the three partnerships is or are participating employers?

For which of the three partnerships did the partner perform personal services?

For which of those was the partner’s services a material income-producing factor?

Regarding each partnership, how much of the net income from it is attributable to capital, and how much to the partner’s personal services?

Regarding each partnership, does the partner own more than 10% of the capital interests, or of the profits interests?

Does each partnership have the same tax year as the others?

Is the plan’s limitation year the same as or different than a partnership’s tax year?

Is the plan’s limitation year the same as or different than the partner’s tax year?

Is one or more of the partnerships not a US organization

Consider Internal Revenue Code of 1986 § 401(d): “A trust forming part of a pension or profit-sharing plan which provides contributions or benefits for employees some or all of whom are owner-employees shall constitute a qualified trust under this section only if, in addition to meeting the requirements of subsection (a), the plan provides that contributions on behalf of any owner-employee may be made only with respect to the earned income of such owner-employee which is derived from the trade or business with respect to which such plan is established.

And consider this rule: “If a self-employed individual is engaged in more than one trade or business, each such trade or business shall be considered a separate employer for purposes of applying the provisions of sections 401 through 404 to such individual. Thus, if a qualified plan is established for one trade or business but not the others, the individual will be considered an employee only if he received earned income with respect to such trade or business and only the amount of such earned income derived from that trade or business shall be taken into account for purposes of the qualified plan.” 26 C.F.R. § 1.401-10(b)(2) https://www.ecfr.gov/current/title-26/part-1/section-1.401-10#p-1.401-10(b)(2).

As always, Read The Fabulous Document.

This is not advice to anyone.