Client runs two businesses. Sch C has income, Sch F has a loss. She pays a large premium for health insurance. Originally I thought you would add the two SE businesses together and if a profit, you could deduct insurance. BUt playing with software, I ran under the Sch C with a profit, it put it on the form and now taxpayer has bigger NOL. Is this right? SE health insurance could be under either business, same person runs both. What's right?
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Actually, you are required to only use one Schedule C to figure the limit.
TTB, page 5-11:
So in your case, if you consider the health insurance as being established under the Sch F business, then no deduction is allowed as there is no profit. If you consider the health insurance as being established under the Sch C business, then the deduction is allowed, up to the net profit from the Sch C business.For purposes of the net profit limit, the taxpayer
cannot combine Schedule C profits from multiple businesses for
one health insurance plan. (Letter Rul. 200524001)
Example: Joe is a sole proprietor and owns Joe’s Auto Repair that had
net profits of $1,000. He purchased health insurance under his individual
name for the year at a cost of $2,000. Joe also owns a second sole
proprietorship business called Joe’s Coffee Shop with
net profits of $1,000. Joe’s self employed health
insurance deduction is limited to $1,000.
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