According to page 6:
Net earnings from self-employment. For SEP and
qualified plans, net earnings from self-employment are
your gross income from your trade or business (provided
your personal services are a material income-producing
factor) minus allowable business deductions. Allowable
deductions include contributions to SEP and qualified
plans for common-law employees and the deduction allowed for the deductible part of your self-employment tax.
Net earnings from self-employment don’t include items
excluded from gross income (or their related deductions)
other than foreign earned income and foreign housing
cost amounts.
For the deduction limits, earned income is net earnings
for personal services actually rendered to the business.
You take into account the income tax deduction for the deductible part of self-employment tax an
contributions to the plan made on your behalf when figuring net earnings.
Net earnings include a partner's distributive share of
partnership income or loss (other than separately stated
items, such as capital gains and losses). They don’t include income passed through to shareholders of S corporations. Guaranteed payments to limited partners are net
earnings from self-employment if they are paid for services to or for the partnership. Distributions of other income
or loss to limited partners aren't net earnings from self-employment.
For SIMPLE plans, net earnings from self-employment
are the amount on line 4 of Schedule SE (Form 1040),
Self-Employment Tax, before subtracting any contributions made to the SIMPLE plan for yourself.
Nothing here states that the net income has to be reduced by the Self-employment tax.
