Accrued to date testing--compensation question

Doing a Profit Sharing.  The only reasonable way the test is passing is using the accrued to date method.  Contribution basis is obviously out, and the regular benefits basis is failing too.

The accrued to date method is passing.

But I want to make sure the compensation used is correct.

Does negative income (a loss) get used as part of the average?  Or do you use zero for those years?

Example:

Year 1: 100,000  Year 2: (50,000)  Year 3:  $100,000

Is my testing comp $50,000 or $66,667?

No negative numbers!

Another question.

What if the comps are:

2020 1,000,000

2019 100,000

2018 100,000

Is the average $400,000 and the test is capped at $285k?

Or $161,667 b/c 2020 is capped at $285k first?

16 minutes ago, BG5150 said:

Another question.

What if the comps are:

2020 1,000,000

2019 100,000

2018 100,000

Is the average $400,000 and the test is capped at $285k?

Or $161,667 b/c 2020 is capped at $285k first?

Not $400,000.

I didn't think so Mike, but I wasn't 100% sure.

Just so that it is clear, it should be 161,667 as acc-to-date is based on average?