This is excluded because of two issues.
First, when the self-employment tax is zeroed out, the IRS will reject the e-file with Fed Reject Code 0195.
0195 Schedule SE - When Self-Employment Tax is significant, Deduction for 1/2 of Self Employment Tax must be significant, and vice versa. If Self-Employed Deduction Schedule SE of Form 1040 is significant, it must equal Deduction for 1/2 of Self Employment Tax from Schedule(s) SE. If Deduction for 1/2 of Self Employment Tax of Schedule SE is significant, and Exempt-Notary Literal is not significant, then Self-Employed Deduction Schedule SE of Form 1040 must be significant.
Second, the IRS adjusts refunds or sends tax bills to customers who have reduced self-employment tax. The IRS does not get and has nothing in place to get the data input in the return with the e-file. They can't tell why the customer has reduced self-employment income and tax, so the math is wrong from their perspective.
This was verified with the IRS before implementation.
This information applies to all years of the UltimateTax software.
