Maximize SEP contribution

[jrumbold]

Client has two Schedule C business activities. Activity A has a net income of $150,000 which would result in a SEP contribution for activity A of $28,389. However, activity B has a loss of $20,000. Client desires to maximize the SEP contribution up to the 415(c) limit.
My belief is that each activity stands on its own for SEP calculation. I would like some confirmation that this treatment is correct since I have not been able to find any mention of this situation in the IRC or IRS pubs.

Then, how about the deduction for 1/2 of SE tax? The SE tax is lowered because my software nets the two Schedule C's together. Do I calculate SE tax separately for each activity to determineadjusted earning from self-employment which will lower the amount for activity A?

[Bees Knees]

Good question.

IRS Pub 560, page 4 says:

If you have more than one business, but only
one has a retirement plan, only the earned in-
come from that business is considered for that
plan.

That would include the calculation for one half SE tax. You figure the calculation for the Schedule C business that has the SEP as if that were the only Schedule C business.

[jrumbold]

Thank you

I guess I didn't search Pub 560 hard enough so thank you for pointing that out. This is exactly how I handled it including the SE calculation. Unfortunately, my tax software (TaxWorks) doesn't separate multiple Sch C's for this calculation so I had to do a manual calculation and override the input.
Thanks again.