We received a notice for a taxpayer and are having a hard time finding the answer on the IRS website. Hoping someone here can help.

Background - married taxpayers, both self employed with 2 young children. Taxpayer has a sch c profit of $34,900 and spouse has a sch c loss of $2,500.  

Lacerte used the net of the profit from the taxpayer and loss from the spouse when figuring earned income and calculating the earned income credit.  The IRS notice is not allowing the spouse's loss when figuring their EIC and therefore they are receiving a smaller refund because their income is higher. 

Reading through the EIC worksheet and Publication 596, I can't find anything that says whether you can or can't combine a net profit and net loss when calculating earned income.