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Subject:  Self Employed w/no Income - IRA? Date:  4/6/1998  9:37 PM
Author:  rjbutler Number:  3297 of 128102

My wife is a self employed writer. This year, expenses exceeded income. Two questions:

We're using Section 179 for several pieces of equipment, and she also qualifies for a home office deduction. From what I have read the HO deduction can't take her income negative, and my understanding is that the rest carries forward to '98. So she's ended with a net income of zero.

Is there any benefit to using standard depreciation instead of 179 on some of the equipment and taking the full home office deduction this year? Either way, we are essentially carrying part of this years deduction into next year (or future years in the case of depreciation).

Second, she's had a SEP-IRA in previous years. This year, though, 15% of nothing is nothing. Can she open a standard non-deductible IRA for '97 even if she had a net income of zero (with the intent of rolling it into a ROTH)? Does she qualify for a spousal non-deductible IRA? I have a 401K plan at work and we don't qualify for a deductable IRA.

Thanks very much.

Bob Butler
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