Client has SEP IRA for many years. In 2009 she had Schedule C income AND Schedule E income (generated from K-1 where she was partner and received guaranteed payments). My software computed her 2009 SEP deduction using the income from schedule C & E. But I think that’s wrong- my concern is that the SEP was not established at the entity level by her partnership but by herself at the individual level. Therefore I’m thinking that she cannot count the schedule E income in determining the SEP contribution on her 1040, but can only count the schedule C income.

Does anyone know the answer?

Thanks in advance.