We've explained and provided supporting references several times. Contributions to an individual 401(k) are limited to compensation (tax code section 415(c)(1)(B)). Compensation is defined as net earnings (section 401(c)(2)). Net earnings are net profit minus the employer-equivalent portion of self-employment taxes (section 1402(a)(12)). These references clearly specify the order of operations (dependencies) which results in the 401(k) contribution being limited to the net profit minus the deductible (employer) portion of self-employment taxes.
