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The deduction for a contribution to a retirement plan for anowner of a sole proprietorship is not taken on Schedule C.

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Assuming Lee owns a dog grooming business, which is a soleproprietorship, and he has net self employment income of $100,000and he pays SE tax of $16,000 (assumed), the most that he cancontribute to a Keogh plan is $25,000.

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Assuming Fred owns a fire arms training business, which is asole proprietorship, and he has net self employment income of$140,000 and he pays SE tax of $20,000 (assumed), the most that hecan contribute to a Keogh plan is $26,000.

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Question 8

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Partnerships can have special allocations in which income isallocated disproportionately to ownership

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A family limited partnership generally separates the value ofthe business equally between the general partner(s) and the limitedpartners.

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One of the benefits of a FLP is that transfers of the limitedpartnership interests can be completed at a substantial valuationdiscount.

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