You are correct. If you are self-employed, you must have a net profit from your business in order to take the self-employed health insurance deduction. Similarly, your contribution to a business retirement plan (e.g. Solo 401(k) or SEP IRA) is limited by your profit from business. Also, if you don't have any profit, you won't pay any self-employment tax, so you won't have a deduction for 50% of your self-employment tax. If you have a Solo 401(k), and take a deduction for health insurance, the combined amount of those two items cannot exceed the amount of your business profit.
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